Tesla Technology Testing Toyota’s iQ

TOYOTA CITY, Japan – Against the backdrop of its stormy initial public offering, Tesla Motors Inc. remains a topic of “lively discussion” at Toyota Motor Corp.

Though no final decision has been made, the Japan-based auto maker is contemplating Tesla technology to power its iQ electric vehicle, scheduled for limited production in 2012, says Yutaka Matsumoto, project general manager-technical strategy and research and development management.

Toyota took a $50 million stake in Tesla seven weeks ago, as part of a deal that saw the EV maker acquire a portion of the former New United Motor Mfg. Inc. assembly plant near Tesla’s California headquarters.

The facility became available after Toyota ended production there following the dissolution of a joint venture with the former General Motors Corp.

Confirmation that the iQ minicar may benefit from Toyota’s investment in Tesla follows speculation the EV car company established by PayPal-founder Elon Musk could provide technology to power a Toyota EV. Previously, the partners had not linked their aspirations to a specific nameplate.

A commitment from Toyota would be timely for Tesla, which saw its stock get hammered Wednesday by selloffs. Tesla shares closed at $15.80, nearly half the peak price established last week.

But Toyota is trying to avoid being “hasty” in its development of EVs, Matsumoto tells Ward’s during an event here to spotlight the auto maker’s latest quality-control initiatives.

Expect Toyota iQ EV to resemble FT-EV concept revealed in 2009.

Having produced and sold its RAV4 EV from 1997 to 2003, Toyota has proven its in-house capability, he says, noting the “base technology” is the same as the auto maker’s industry-leading hybrid-electric system.

“The same energy-management system can be utilized, same motor,” Matsumoto says. “Therefore, we have confidence that we can make this EV.”

Strategically, Toyota favors plug-in hybrid-electric vehicles as the most conducive solution for the evolving EV market – a posture that runs counter to Musk’s stated claim that declining oil reserves will compel auto makers to transition entirely to battery power.

Musk’s view must have made for interesting exchanges with Toyota President and CEO Akio Toyoda, with whom he negotiated the alliance.

Sources with knowledge of the discussion tell Ward’s Toyoda approached Musk about a deal, which was conceived while the Toyoda chief was behind the wheel of a Tesla Roadster, with the Tesla CEO riding shotgun.

Toyota is launching a plug-in hybrid version of its Prius hybrid about the same time the iQ is due. Citing shorter charging time, extended range and better prospects for battery life, “maybe the major (EV) market can be plug-in,” Matsumoto says.

All-electric vehicles likely pose a better solution for short urban commutes, he adds.

Toyota also remains committed to developing vehicles powered by hydrogen fuel cells. The auto maker will introduce a fuel-cell vehicle in 2015, but the technology’s proliferation depends on the establishment of an infrastructure to accommodate refueling, Matsumoto says.

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