Under the agreement, Toyota will invest $50 million in Tesla, which will acquire the NUMMI plant and begin production of Teslas's Model S sedan in 2012. The deal is expected to create more than 1,000 new jobs
The joint venture was unveiled by Tesla's CEO Elon Musk at a 5 p.m. news conference with Gov. Arnold Schwarzenegger, who has been eager to highlight job creation. The news was hailed by Sen. Dianne Feinstein, D-Calif.
"I congratulate Tesla and Toyota today," she said in a prepared statement. "This partnership is unique, innovative, and entirely practical....As one who has followed NUMMI since its inception, I was very dismayed and disheartened by its closure in April. I celebrate the new life of opportunity which is inherent in this new venture."
Some industry analysts also endorsed the announcement.
"This seems like a good deal for both parties, especially Toyota, from being able to avoid the political fallout from shutting NUMMI down to being able to offering a new electric vehicle with just a low initial investment cost," said Jeremy Anwyl, CEO of Edmunds.com. He said his only concern was the Tesla to be made at NUMMI would arrive years after some competing electric cars, such as the Volt and Leaf, hit dealer showrooms later this year.
"Tesla's credibility has been greatly enhanced thanks to this partnership with Toyota," added John O'Dell, Senior Editor of GreenCarAdvisor.com. "Many had doubted the company's ability to deliver on all its promises, but Toyota must have conducted substantial due diligence before making this investment."
But the deal was bad news for the city of Downey in Los Angeles County. For months, it has been working with Tesla in hopes that the automaker would locate its factory there. The Downey City Council was hours away from voting on the terms of a lease for Tesla at the site of Downey Studios, just outside Los Angeles, at a plant that was expected to initially create up to 1,200 jobs.
But this afternoon, Tesla executives finally told Downey city officials that they were going to Fremont instead, catching staffers who have spent hundreds of hours on the nearly-final deal completely by surprise.
"We're shocked, appalled and disgusted," said Downey Councilman Mario Guerra. "We have been dealing in good faith with Tesla and feel stabbed in the back."
"We understand it's a business decision," said Gilbert Livas, Downey's assistant city manager. "We just wish Tesla had let us know much earlier in the process."
The announcement is a remarkable turnaround for the NUMMI plant.
Located on 380 acres at the site of a General Motors plant that closed two years earlier at Highway 880 and Mission Boulevard, the 50-50 GM-Toyota collaboration struck in 1983 envisioned NUMMI as a boost for both carmakers. Toyota would get a car-making beachhead in the United States and GM would get a chance to learn Japanese manufacturing techniques.
Kaizen, the Japanese word for continuous improvement, became a common term used at the plant. Another popular catchphrase was just-in-time-manufacturing, reflecting Toyota's streamlined and rapid assembly process. Japanese-style teamwork also was heavily emphasized.
The partnership by most accounts was a remarkable success. NUMMI's first car was a Chevrolet Nova. But over the years, it made several GM and Toyota vehicles, including the Chevrolet Prizm, Pontiac Vibe, Toyota Corolla and Toyota Tacoma. At its peak, the plant employed about 5,700 and in 2006 produced more than 400,000 vehicles.
But over time, the manufacturing operation became something both GM and Toyota began to view as an unneeded expenses, especially as the world tumbled into the recent recession, automobile sales began to seriously slide and GM wound up in bankruptcy.
The factory was doomed last summer after first General Motors and then Toyota announced they were severing their ties with the facility. When a bright red Toyota Corolla rolled off the assembly line at 9:21 a.m. on April 2, the last of 7.7 million vehicles produced at the plant, it finally ended more than 25 years of production at the last auto plant west of the Mississippi.
Tesla, which was incorporated in 2003 and once dubbed "the poster child of green mobility," has built its business model and future on the green-technology revolution sweeping the country.
Devoted to making all-electric cars and related vehicle components, the Palo Alto company began selling its first vehicle, the Roadster, in 2008 and it immediately drew wide-spread attention within the automotive industry with an advertised ability to hit 60 mph from a stop in just 4 seconds and a cruising range between charges of more than 200 miles.
And flush with a $465 million federal loan commitment in June last year to boost production of its fuel-efficient cars, Tesla is hoping to soon begin making its next car, the Model S sedan, which the company has said would sell for about $45,000, roughly half the price of the speedy Roadster.
Contact Dana Hull at 408-920-2706. Follow her on Twitter at Twitter.com/danahull
Tesla Motors
Incorporated - 2003
Headquarters - Palo Alto
CEO - Elon Musk
Business - Sales of all-electric vehicles and related components. It sold its first car, the Roadster, in 2008
Employees - 514 as of end of last year
Total revenue - $108.2 million since its inception through Sept. 30 last year.
Total losses - $236.4 million since inception through Sept. 30 last year
Filed to become public company on Jan. 29,
