September 8, 2014 / 7:56 AM / in 3 years

Tesla CEO says could sign new deal with Toyota in 2-3 years

3 Min Read

Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo September 8, 2014.Toru Hanai

TOKYO (Reuters) - Electric carmaker Tesla Motors Inc (TSLA.O) and Toyota Motor Corp (7203.T), the world's best-selling automaker, could sign a new deal over the next two to three years, Tesla CEO Elon Musk said, as the two firms ready to end an existing program.

California-based Tesla has been supplying batteries and motors for Toyota's RAV4 electric SUVs that went on sale in 2012, but that partnership is set to end this year after Toyota sold just 2,000 of the vehicles.

"If you look at maybe two or three years from now, I would not be surprised if there is a significant deal with Toyota and Tesla," Musk told a news conference on Monday in Tokyo where he made the first deliveries of the Model S luxury electric sedan in Japan.

He said the deal involve higher volumes than the existing partnership but did not comment on the details of what the deal could involve and said there were no definitive plans.

A Toyota executive also said no specific plans were in place but added the two companies hadn't ended their relationship.

"There are still possibilities in certain areas of their operations especially in North America where we may find common ground," said the executive, who declined to be named. "It's not like we have severed our ties."

Toyota spokesman Ryo Sakai said the company could not comment on the matter.

Tesla is planning an autonomous driving system, with part of the technology to be introduced in three years' time, the Nikkei reported, citing Musk.

Tesla Motors Inc Chief Executive Elon Musk speaks during a news conference in Tokyo September 8, 2014.Toru Hanai

The company will start introducing the technology in cars slated to go into production three years from now. These cars are likely to cost around $35,000, the Nikkei said.

That is about half the starting price of Tesla's first mass-market car, the Model S sedan.

Tesla will make fully autonomous cars in the next five to six years, the Japanese newspaper said.

Slideshow (2 Images)

In 2010, Tesla purchased the former NUMMI factory in California after Toyota closed the plant and currently manufactures the Model S there. In return, Toyota took a $50 million stake in Tesla.

In Japan, one of the first customers that received the model S — which costs around 7.4 million yen ($70,300) after subsidies — was Panasonic Corp's (6752.T) Executive Vice President, Yoshi Yamada.

Panasonic is set to fund part of the cost of a new $5 billion battery factory that Tesla is building in Nevada. Musk repeated the Japanese electronics maker is likely to fund 30 to 40 percent of the total cost.

Panasonic also reiterated it wouldn't comment on the size and timing of the investment.

Asked whether Panasonic would cover 30 to 40 percent of Tesla's battery plant, called the Gigafactory, Yamada told reporters: "Isn't that all speculation?"

($1 = 105.2900 Japanese yen)

Additional reporting by Ankit Ajmera in Bangalore; Editing by Chris Gallagher, Mark Potter and Joyjeet Das

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