* Toyota to invest $50 mln in Tesla, sees stake about 2.5
* Tesla to build new electric sedan in closed Toyota-GM
* Toyota chief approached Tesla about cooperation
* Toyota stock ends down 1.9 pct, roughly in line with
Nikkei (Rewrites throughout, adds analyst comment, details,
By Poornima Gupta and Chang-Ran Kim
PALO ALTO, Calif./TOKYO, May 20 Toyota Motor
Corp (7203.T) said it would take a $50 million stake in U.S.
electric carmaker Tesla Motors, a move that gives the Japanese
automaker a chance to repair its dented public image and vaults
the California start-up on to the the world stage.
The two companies said on Thursday they would cooperate on
the development of electric vehicles, parts and production
system. Separately, Tesla will take over a plant Toyota closed
in the San Francisco area and build its upcoming all-electric
Model S sedan at the site from 2012.
The David-and-Goliath handshake highlights a changing
dynamic in the auto industry, where newcomers such as Tesla and
BYD Co (1211.HK) of China are challenging established players
in the uncharted field of mass-produced all-electric vehicles.
At a joint news conference in California, Tesla Chief
Executive Elon Musk described the investment as a "gesture of
support" from Toyota Chief Executive Akio Toyoda, who
approached him in a whirlwind corporate romance that included
dinner at Musk's house and a test ride around Los Angeles in
Tesla's pricey electric Roadster sport car over the last month.
Tesla aims to tap Toyota's expertise in mass production
while Toyota wants to win back public support hurt by its Prius
hybrid recalls and San Francisco Bay Area protests against its
decision to close the plant that Tesla is buying.
"Toyota gets to save face in California and give the
impression that they're beefing up their electric vehicle
strategy, which is seen as lagging Nissan Motor's (7201.T) and
Mitsubishi Motors' (7211.T)," said Tatsuo Yoshida, Tokyo-based
auto analyst at UBS Securities.
"An investment of $50 million is not much for Toyota, and
it seems like a win-win for everyone involved," he said.
President Toyoda, a licensed car racer who has pledged to
turn the company founded by his grandfather into a more nimble
one, said Toyota could learn a lot from Tesla's entrepreneurial
"Toyota was once a start-up company," he said through a
translator at the news conference, also attended by California
Governor Arnold Schwarzenegger.
"Working with Tesla will provide us with a powerful
stimulus," he said.
Toyota will take the stake in a private placement to close
immediately after Tesla's much-anticipated initial public
offering, and estimated the $50 million would amount to a stake
of around 2.5 percent. Musk said that another Tesla investor,
Germany's Daimler AG (DAIGn.DE), approved of the Toyota stake.
Toyota shares fell 1.9 percent to close at 3,355 yen in
Tokyo on Friday, compared with a 2.5 percent drop in the
benchmark Nikkei 225 index.
The sudden interest in Tesla signals a shift in Toyota's
hitherto skeptical view of battery-run electric vehicles as a
viable alternative to today's internal combustion engine cars.
While stressing that it still considered gasoline-electric
hybrid vehicles the most promising and effective alternative to
reducing emissions and fuel use, Toyota said Tesla's cars,
capable of long range highway driving, made it rethink the real
potential of all-electric vehicles.
Most global automakers, including Nissan and Renault SA
(RENA.PA), which have most vocally championed electric cars,
have said the high price of batteries meant such zero-emission
cars were most suitable for short-range driving.
Toyota said it wanted to know more about Tesla's
technology, which packs together lithium-ion batteries similar
to those used in cell phones, to see whether it could be
adopted for its own cars. Toyota develops and produces
batteries mainly in a joint venture with Panasonic Corp
Tesla's $109,000 Roadster sports car has become an emblem
of California's plans to reinvent itself as the hub of clean
technology of all sorts. Tesla has sold more than 1,000
Roadsters in North America, Europe and Asia so far.
Production of Tesla's Model S will begin at the plant,
called New United Motor Manufacturing Inc (NUMMI), in 2012 and
ramp up to 20,000 per year.
Toyota closed the sprawling NUMMI plant in Fremont, Calif.,
in April, laying off over 4,500 workers after former partner
General Motors [GM.UL] pulled out of the joint venture plant as
part of its post-bankruptcy restructuring.
NUMMI had a capacity of 400,000 cars per year, so the Model
S production will occupy only a small corner of the plant,
acknowledged Musk, who called it an investment in the future.
Governor Schwarzenegger said Tesla eventually could create
The six-year-old start-up has been granted $465 million of
loans from the U.S. government to build a new lower-cost model.
It had been hunting for a manufacturing site in California and
initially rejected NUMMI as too big. (Editing by Bernard Orr
and Valerie Lee) ((firstname.lastname@example.org; +81-3-6441-1804;
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