Tesla an esteemed firm involved in the manufacture of electric components had entered into a joint agreement with Toyota. Based on the agreement Toyota agreed to enjoy $50 million in Tesla and Toyota in turn sold its California unit to Tesla at price of $42 million. There is an interesting episode that happened that led to two firms to sign a deal. Four years ago, the Chairman of Tesla Motors Elon Musk invited a fan to his house in California; he lent a Roadster sports car to his guest and allowed him the freedom to drive it. His guest is none other than the president of Toyota Akio Toyoda.
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The encounter turned out memorable, the signing of $50 million and $42 million deal happened within weeks. The two parties agreed to retrofit a Toyota RAV4 car and also considered a stake on RX SUV electric Lexus car. Despite the detailed planning, the agreement between Tesla and Toyota is fragile; there were less than 2,000 orders for RAV4 electric car. With just few orders, Toyota had to raise the price of the vehicle by a massive $50,000, along with it came increased petrol costs that shot up by two fold.
Apart from dwindling customer sentiment, there were other factors that tarnished the partnership. The appointment of engineers was packed, so much has to be done, and there was little scope to focus on electric cars. Electric vehicle technology has progressed to the brim and auto manufacturers all over the world are focusing on the importance and beneficial outcomes of clean and green technology. Even with the time constrain, it is surprising to learn of Toyota’s move to distance itself from Tesla. Toyota has frequently mentioned of its plan to focus on fuel cell technology. Musk says Toyota’s reason to move away from Tesla deal stems from its aim to concentrate more on fuel cells more than electric vehicles.
On Tesla’s and Toyota’s partnership distancing move, the managing director of Intelligence Automotive Asia, Ashvin Chotai said, ‘’it is not common for two successful firms to produce victorious outcomes. When one firm tries to invest in something it has drifted from and the other is a major player there is going to be mishaps.’’
Toyota and Tesla did not comment on the deeper details of development outcome of RAV4 electric car. The initiative to join the alliance brought out the weaknesses of both firms. The Bank of America Merrill Lynch says Tesla started in 2003, and it was the period when car firms sought to increased expansion and manufacturing output.
The move of Tesla and Toyota to enter into an agreement seemed practical going by the massive developments in electric vehicle sector. The world is under the crux of recession that has led to uncertainties. Even a small investment is a risk since it is difficult to draw customer sentiment when fuel prices and cost of living has increased considerably.
There has been tremendous progress in eco-vehicle sector; the latest hot topic of research is fuel cell technology. Toyota aims to invest majorly in this segment, only time will tell when the feasibility level of manufacture and investment in electric car market becomes effectively approachable.
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