'Historic' Toyota/Tesla deal will use NUMMI plant

Electric cars to be produced at former Fremont New United Motor Manufacturing plant

A historic partnership between Toyota Motor Corporation and Tesla Motors to produce electric vehicles will bring jobs back to the New United Motor Manufacturing (NUMMI) plant in Fremont, CEOs Elon Musk and Akio Toyoda announced this afternoon in Palo Alto.

Toyoda waxed poetic about his first drive in a Tesla Roadster in Southern California six weeks ago:

"I felt the wind -- the wind of the future," he said.

Toyota is investing $50 million in the company and will partner with Tesla to manufacture electric vehicles, Toyoda said. The agreement was reached on Wednesday.

Musk said Tesla is purchasing the NUMMI plant, for an undisclosed sum. Toyota and General Motors Co. closed the plant in early April and terminated 4,700 workers, but thousands of others who worked for parts suppliers -- as many as 25,000 by some accounts -- were also affected.

Tesla will begin production of its Model S electric sedan in 2012. A 300-mile range, seven-seat SUV will also be manufactured at NUMMI, he said. Once it reaches full production, Tesla expects to produce 20,000 vehicles a year at the NUMMI plant.

Initially only a small corner of the 5.4-million-square-foot plant will be used, but Musk said he expects the entire facility will eventually be utilized.

Musk said he expects a third-generation vehicle in the $30,000 range will be produced "in the hundreds of thousands." He pointed to Toyota's Corolla as inspiration.

The partnership could create 1,000 jobs initially and eventually as many as 10,000 worldwide. Half of the jobs are expected to be at NUMMI and the other half would be with suppliers, Musk said.

Musk said the company remains neutral on the subject of a union and that he would neither encourage nor prevent workers from unionizing if they choose.

Fremont City Councilwoman Suzanne Lee-Chan said the city is still sorting out the effects of the plant's closure.

"It's a shot of fresh air because of all the things happening. There is always a concern when a large plant or military installation closes that it could just sit there and decay," she said.

Toyoda recalled that decades ago Toyota was also a young venture business like Tesla.

"Toyota will provide the DNA of car making that NUMMI developed over 25 years will continue on," he said.

Gov. Arnold Schwarzenegger, who also spoke, said the deal was aided by tax incentives.

"What we are witnessing today is an historic example of California's transition to a cleaner, greener, more prosperous future," he said.

Musk said the company will receive a sales-tax rebate on equipment for capital equipment purchases that could amount to $20 million. But he stressed the company only gets that incentive if it buys the equipment -- and Tesla will only buy the equipment if it sells cars.

Musk said Toyota and Tesla came to their agreement quickly. "Toyota was just as fast as Tesla," he said, punning on the car's acceleration.

Tesla will produce powertrains for Toyota and other car manufacturers. "We're not trying to hold our technology close to our vest," Musk said.

Tesla will ship its first Roadsters to Japan next month and perhaps as early as in a week, he said. The market in Japan is expected to be significant, he added.

Asked about Toyoda's test drive of the Tesla, Musk said the veteran car manufacturer handled the car confidently.

"He was really putting it through its paces," he said.

Rep. Anna G. Eshoo issued a statement upon Tesla's announcement of its partnership and plans to use the NUMMI plant.

"Tesla is an instructive example of what Silicon Valley represents -- a business expanding America's intellectual and technological horizons.

"Continuing this tradition, today Tesla is turning a Bay Area loss into a national win. The partnership at NUMMI will create hundreds of green jobs and drive the advancement of electric vehicle and clean energy technology," she said.

Eshoo said the Department of Energy's Advanced Vehicles Technology Manufacturing Incentive Program, from which Tesla secured a loan, "is proving its value, making smart investments in 21st Century technologies which will position America to compete and become the global leader in producing clean energy."


Like this comment
Posted by Brendan
a resident of South of Midtown
on May 20, 2010 at 9:36 pm

Nice! Huge for Tesla, Nummi, and the whole Bay Area. Go electric! A much more sensible way to drive.

Like this comment
Posted by no more drill baby drill
a resident of Downtown North
on May 20, 2010 at 10:46 pm

Big flip flop from Arnold calling for drill baby drill last month to announcing a big new electric car deal today. But Arnold is right, this is a big win win win all the way around.

Like this comment
Posted by JM
a resident of Charleston Meadows
on May 21, 2010 at 11:40 am

All sounds good. Only that if Tesla cars do not sell for whatever reason, who will be the loser? Government who secured the loan? That's not so much Silicon Valley spirit.

Like this comment
Posted by DR
a resident of Mountain View
on May 21, 2010 at 12:58 pm

The big win is the investment in Tesla motors by private sources. Toyota will make sure their investment is safe by helping Tesla enjoy success.

Like this comment
Posted by TT
a resident of Barron Park
on May 21, 2010 at 1:42 pm

also a big win for US manufacturing!!!

Like this comment
Posted by fyi
a resident of Greenmeadow
on May 21, 2010 at 2:17 pm

to Drill: Again..nobody is saying "no new sources of energy"..we are saying "drill AND new sources". The new sources are unproven, unreliable and extremely expensive thus far, yet our daily needs are pressing on us with ever increasing national security issues related to shutting down our oil supply from foreign sources.

May as well rely on other countries for our food and not grow any of our own!

Sorry, but further commenting on this topic has been closed.

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