Tesla's Toyota deal informal, paying $42M for NUMMI (Silicon Valley)
Tesla Motors Co. filed a revised IPO prospectus Thursday that makes it clear that many details of its partnership with Toyota Motor Co. have yet to be hammered out.
Tesla said in the regulatory filing that it will pay $42 million for the New United Motor Manufacturing Inc. plant in Fremont. The purchase involves 207 acres, about 55 percent of the site, including all manufacturing facilities there.
Despite formal public announcements about a partnership between the Japanese auto giant and the Palo Alto-based electric car maker, the companies haven't finalized their agreements "and may never do so," the Securities and Exchange Commission filing said.
The new details are contained in a revised IPO prospectus that said the purchase of the Fremont plant from Toyota Motor and Motors Liquidation Co. will close within months after the initial public offering.
As part of the deal with Tesla, Toyota has agreed to buy $50 million worth of stock in Tesla's IPO when it happens.
Tesla said the companies intend to cooperate on the development of electric vehicles, and the electric car maker will get Toyota's support with sourcing parts and production and engineering expertise for Tesla's Model S sedan.
Ron Harbour, partner in charge of the North American automotive practice at the consultancy Oliver Wyman, said it’s understandable the companies might maintain an informal agreement at the outset and could try working together “and see what might be possible.”
The companies might “use bits and pieces from each other until they see the genesis of something more formal.” For example, Tesla has struggled in the past with getting a reliable transmission, while Toyota has its own transmission division.
“It’s an opportunity where you can envision them working on that together, where they could get their engineers together,” Harbour said. “Tesla gains from the expertise of Toyota’s experience, and Toyota gains by selling their transmissions to Tesla.”
Read more in the Silicon Valley / San Jose Business Journal.
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