Elon Musk Expects “Significant Deal With Toyota” In 2-3 Years – Higher Volume Than RAV4 EV


Elon Musk Hands Over Keys To Japan's First Tesla Model S Buyers - Makes Comment On Tesla-Toyota Future

Elon Musk Hands Over Keys To Japan’s First Tesla Model S Buyers – Makes Comment On Tesla-Toyota Future

The current Toyota RAV4 EV is dead just as soon as Toyota sells the remaining units, which at the end of August numbered only 470.

The initial Toyota-Tesla deal called for a total of 2,600 RAV4 EVs to be built and now as inventory dwindles down to zero, Toyota will be left without a pure electric vehicle to sell in the U.S.

Tesla CEO Elon Musk thinks that Toyota will be back for Round 2 soon though.

In speaking at the launch of the Tesla Model S in Japan, Elon Musk told reporters that Tesla expects to team up again with Toyota on a “significant” joint EV project within the next three years.

Musk believes that the next joint deal will be for higher volume than the limited-production RAV4 EV:

“I think that if you look out maybe two or three years from now, that I would not be surprised if there is a significant deal with Toyota.”

“My best guess is that it would probably be something significant, maybe on a much higher volume level.”

Of course, Toyota owns a stake (2.4%) in Tesla, so a future joint project shouldn’t be unexpected, but Toyota’s stance right now is that hydrogen fuel-cell vehicles are the future and it’s sticking with that statement for the time being.

On the flip side is Tesla CEO Elon Musk who basically sums up fuel-cell vehicles by calling them “fool cells.”

In our opinion, Toyota will come around to pure EVs and will certainly turn again to Tesla for assistance.

Officially, Toyota won’t comment on future products and has “nothing to say” in regards to the statements made by Elon Musk.

Musk concludes:

“We love working with Toyota.  We have a huge amount of respect for them as a company and certainly much to learn.”

Source: Automotive News

Categories: Tesla, Toyota


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71 Comments on "Elon Musk Expects “Significant Deal With Toyota” In 2-3 Years – Higher Volume Than RAV4 EV"

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I have to wonder if negotiations are ongoing or if he just sees their fuel cell project crashing then them coming back begging for another compliance car. Pretty ballsy to say in 2-3 years they’ll be working on a mass produced ev with tesla since nothing official has been announced on it.

He stated in the past that they were going to make a deal but they didn’t have the battery supply for it and would not use their supply for Toyota vs Tesla’s own cars.

On the heels of battery production news, as early as 2016 from the gigafactory, maybe it shouldn’t be too surprising that Musk is already talking up what may soon be a pile of batteries to sell.

A fuel cell does not rule out an EV-motor and/or a battery from Tesla. Even FCEVs are EVs and need a buffer battery.

Excellent point. I had not considered a Tesla-powered Fuel cell car, but it certainly is possible.

I tend to agree more with Gsned57, though. I think Musk is assuming that the Fuel Cell project will fail to meet Toyota’s immediate needs (even Toyota says it will be 2030 before they are competitive with EVs!), and they will need to fill the gap with a joint venture.

Buffer battery for fool cell car requires different kind of chemistry than long range EV and Tesla does not have much competitive advantage on such. Electric motor on the other hand is so simple that it probably does not make sense to outsource the manufacturing.

How so?

FCVs use a high power battery pack (like other hybrids). These use a different chemistry than what Tesla is using and has much higher cycle life (as necessary for a smaller hybrid pack).

Where Tesla’s batteries might fit in is when the fuel cell is used in a PHEV, but so far that’s not what Toyota and others have planned (and also doesn’t fit well with the way California’s hydrogen infrastructure is being designed, which is a “cluster” design optimized for local driving).

Ford and GM both think fuel cells may need to plug-in 😉 Hydrogen cost before subsidies and any kind of road tax is $10/kg today. I think if you are trying to use renewables you would want at least a 20 mile battery and a plug.

Musk is basically reiterating his comments in the Q&A from the annual shareholders meeting. He doesn’t see the FCEV selling enough to meet Toyota’s ZEV requirements and Toyota will need something higher volume by 2018. Tesla will have the GF online by then, so battery cell availability will not be the same issue it is now.

We discussed this (97 comments) in the piece I wrote a few months ago too, http://insideevs.com/opinion-toyota-really-wanted-launch-higher-volume-ev-fcev/.

Toyota will need to comply and an important factor is what is cheaper for it, a subsidized BEV compliance car or a subsidized HFCV deal.

Pretty sure Tesla will be able to offer Toyota some pretty compelling compliance deals once that Gigafactory comes online. Cars with the sort of range and Supercharger support that people actually want to own in the increasing numbers needed to comply.

Stuffing Toyota’s HFC sedan that’s basically an impractical alternative for the Prius down consumer’s throats in sufficient numbers may turn out to be a very costly alternative by comparison.

I agree.

Leasing the HFC sedan in California does give them a way to gain credits and test the technology in hands of an early adopter community. They have been working on the tech for a long time, so I can see why they would want to give it a shot.

I just don’t see how it will win consumers over like plug-ins are currently. I have not driven or lived with a HFC. It is still vaporware outside of California.

Hydrogen fuel cells are a nightmare from which I’m struggling to awake.

Why, global fool cell car production will remain in less than 1000 fool cell cars per year at least for the next 15 years.

Absolutely no sane person is ready to buy such car, because they are every way inferior to ICE cars.

My understanding is that hydrogen (made from natural gas) is twice as expensive as gasoline. I don’t see the price coming down. Sure, the fuel cell vehicle emits only water vapor but that’s a greenhouse gas too.

Why would Musk contemplate a new supply deal with Toyota to begin later this decade unless he feared massive overcapacity at his 500,000 cars/year Gigafactory, and what does this do to the pie-in-the-sky sell-side sales estimates?

Keep in mind if you own this stock (yes, I’m short) that a Tier 1 auto supplier such as JCI is selling at 0.89x revenue and that’s at a cyclical peak.

Tesla is planning to start construction of two three or even four gigafactories before that first one is completed. European gigafactory is scheduled to start construction in around 2018.

The good thing with battery production is that it is very flexible that you can scale quickly the production on desired level. Just add more production lines and the capacity of existing factory can be increased modularly.

Therefore installing new capacity takes merely months rather than years. Tesla expects the production to start in less than two years although they started constructing factory from scratch and there is lot more to do than to add additional production lines modularly.

This is often what people do not realize that actually, adding new battery production capacity is very fast and it is rather simple to fit the production to demand, because we know for sure that demand is increasing although the exact pace is unknown.


I think the key is that Tesla is in no way planning on stopping with one battery factory. No, that’s just the beginning. If they are successful with the Model III, they will almost be forced to invest in more factories.

Automotive production planning is a long-term process. Laying the foundation (i.e. building the factory) is the hard part. Ramping production up and down (i.e. turning production lines on/off) is relatively easy.

Indeed, my guess is that the global demand for 300 mile and AWD version of Model 3 will be about million cars annually.

E.g. if Model 3 was available today, every taxi driver would not even look any other car, because on board computer with Android compatible apps and electric drivetrain and supercharging ability are just unsurpassed in taxi use compared to anything there is to offer in car industry.

Perhaps few old school taxi drivers would opt into old Mercedes E class from sheer convention, but really, it does not make sense to have anything other than Model 3 as taxi car.

“Every” taxi driver is a gross overstatement.

Supercharging is not available in the vast majority of cities, and insufficient range for long trips (the most profitable ones) or busy days is an absolute killer for them. A REx would pay for itself in less than two years from even a few percent of jobs that a taxi driver has to pass on due to insufficient charge.

But even 10% of the taxi market would be pretty good for Tesla. I’ll give you that.

Obviously I was referring to the richer countries where Mercedes E Class is your typical Taxi car.

That is some serious optimism you have there. I hope you are right but I really doubt things ramp up THAT fast.

When the Model III comes out, you can be an Uber driver 🙂

Step 1: Buy a Tesla Model III
Step 2: ?
Step 3: PROFIT

Dr. Kenneth Noisewater

AWD Model III CUV would _own_.

Upright seating position leading to ease of entry/exit, better visibility, more room, meanwhile the mass of the battery offsets any tipover penalty.

I thought you just turned the production line up faster. 🙂

That’s a strange conclusion to draw. And he’s said that his and Tesla’s goal is to encourage EV adoption across the world and through as many manufacturers as possible. (Hence, for example, the release of their patents.) It sounds more to me like your short position is clouding your judgement.

It’s not “fear”, it’s smart business. No matter what your capacity is, demand is a good thing.

The Gigafactory’s is expected to produce 35GWh of cells per year and buy another 15GWh/yr from Panasonic. That’s far more than needed for 500k cars per year. Other markets are a big part of his plan, including selling packs and/or raw cells to automakers, utilities, homes, etc.

Dr. Kenneth Noisewater

50GWh/yr is good for 500k 100kWh cars per year.

Which would suit me just fine! 100kWh for a _real_ 300mi range..

Tesla should just stay away from Toyota and their toxic corporate culture… Toyota has a very poor reputation for quality and has some of the highest recalls of any automaker on the planet. Tesla would only learn bad lessons from them. Stay away from them, Elon. Stay away and let them kill themselves off with their fool cells.

In what circles does Toyota have a “very poor reputation for quality”? Most people I know think of Toyota as top-notch for quality.

As for staying away, that’s hard to do when Toyota owns a considerable stake in Tesla. Something tells me if Toyota wants to work with Tesla, it is in Tesla’s best interest to do all they can to please Toyota.

And Tesla certainly could learn a lot from the world’s largest automaker. Toyota didn’t get to the top by accident.

< than 3% in stocks is not big deal. Tesla fits more with MB than Toyota.

[Raises hand]

1986 Toyota Truck – 212,000 (14 years) miles no major problems (still started like it was brand new when I sold it)

1991 Toyota Corolla – awesome first AWD car

2008 Scion xB (yes, it’s a Camry drivetrain). No problems at all after 110,000 miles.

I’m confused. Are you raising your hand to my question? It sure sounds like all three of your Toyotas have far exceeded industry “standard” for reliability. If so, why would you say they have a “very poor reputation for quality” with you?

He’s raising his hand in support.

Come on, Brian, that’s not hard to figure out.

And you left him hanging!


Yeah, sorry about that. I guess I deserved that smack…

No, it’s not. It’s just a strange (to me) way of replying – raising one’s hand to signify “not me!”

These people are just wearing musk-ogles. Toyota poor quality? Toyota and Honda have best relase values due to high quality.

How about Edmund’s not recommending their nightmare Tesla car due to frequent service station visits, and multiple drive train failures?

In two or three years the GigaFactory should be up and running and ready to supply battery packs to any automaker at high volumes. So Tesla should have ‘significant’ deals with quite a few auto manufacturers that are lining up now.

I’m not against this of course but I still wonder why Toyota, with years of experience with battery and electric drive train technology, would need Tesla to make an EV.

Hybrid drivetrain and BEV drivetrain are very different. As long as Toyota is only making a niche or compliance vehicle, it doesn’t make financial sense for them to commit the resources to it.

Sure, but since this is supposedly for a higher volume car, I don’t see why they wouldn’t do it themselves. Hybrid cars may be different from BEVs, but they also have a lot in common. I’m sure the Toyota engineers are smart enough to figure it out.

They have years of experience with *hybrid* batteries, specifically the NIMH kind. These don’t have enough energy density to be relevant to modern EVs (esp. the long range ones).

It’s pretty clear they are very weak on their lithium-ion battery sourcing. I remember interviews with Toyota execs when the Leaf came out (and the talk was about the relatively low $375/kWh pack price). They said BEVs were impossible to make profitably because the batteries they were sourcing (primarily for the Plug-in Prius) costs well over $1000/kWh. That shows how far behind they are in EV battery tech even versus Nissan.

It is well know which battery manufacturers offer what batteries at what prices. I’m sure SDI would be more than happy to work with Toyota on making EVs. So would Panasonic. Or most other battery manufacturers. The fact that Toyota hasn’t done it yet has nothing to do with their ability, everything with their motivation – or complete lack thereof.

Perhaps things will work out by looking for suppliers (of which Tesla will be one), but that’s a different point from what I’m responding to, which is that they DON’T have the relevant experience in the BEV battery field, even though they have it in the hybrid and PHEV field.

And expecting cell suppliers to come in with cells (or packs) that will be competitive in price versus a vertically integrated company (like Nissan and soon Tesla) is not necessarily a good one to make. After all, Toyota previously paid 3x as much as Nissan for batteries. Also, given the scale of the Gigafactory, there’s a good possibility that what Tesla supplies would be less expensive than Toyota sourcing their cells themselves and making their own packs.

After Tesla’s acerbic comments about Toyota engineers, I doubt that they will do business again without an apology from Musk.

Photo with caption: “Tesla’s Influence Can Clearly Be Seen In The Toyota RAV4 EV” – that’s the prototype! The production model has no such reference to Tesla. All references were removed, it just says Toyota everywhere.

Dear Elon:

It always hurts when you are dumped in favour of someone new, and we can all sympathise with your pain.

However it really is time that you moved on, as Toyota is very happy with its new partner, BMW, and they have SO much to offer each other!

BMW has that snazzy carbon fibre technology, which Toyota really fancies, as it will enable a lighter car than you ever could!

For the other part of the bargain, BMW likes Toyota’s fuel cell technology a lot and it looks good for their future together!

Their baby i3 is very much looking forward to having a fuel cell from auntie Toyota.

Unfortunately the battery world has moved on a bit from your cute idea of putting together 18650 cells, with prismatic and pouch formats getting the right energy density.

They still look good with your bell bottom trousers though!

Do try to move on!
Toyota has, and isn’t coming back.

It looks like you will be all alone in your Mars colony.

I also wonder if Toyota and Panasonic swap notes on the joys of working with Musk.

He is deeply, publicly disrespectful towards technologies his partner is working on, and seems to think he can basically hijack Panasonic’s battery expertise, to have them as a very junior partner.

Tesla did a fine job of utilising Japanese battery technology by putting their cells together in a very clever way.

He appears however to have the facility of complete social unconsciousness I have sometimes noted in some South Africans.

He doesn’t even seem to realise how deeply he is likely to be loathed in Japan by both Toyota and Panasonic.

I have little doubt that if Toyota decide to use Panasonic batteries, they will do so directly without involving Musk’s hyperfactory, or its close to impossible to work with owner.

His manners will go down a treat in China too.

That is some weird quasi-racist pop-psychology you got there.

Fair enough.

I rather regretted how parts of my post would read on further reflection, but unfortunately had no edit facility.

However it remains the case that Musk is grossly disrespectful and socially oblivious.

Toyota is likely as keen on reigniting a business connection as his erstwhile partners in Tesla.

What goes around comes around, and in the adult world adolescent hubris does not work forever.

You should stop experimenting sniffing hydrogen gas, it definitively displace your brains oxygen supply.

That explains why Davemart continually fails to grasp basic physics and economics. If the average hydrogen station costs around 2 million dollars to build and has to sell fuel at 8$ a gallon, the station likely becomes profitable selling hydrogen in about FIVE YEARS.


Interestingly, Hydrogen embrittles metals and squeezes between atoms allowing it to leak from storage tanks and related infrastructure. The replacement costs to fix an entrope riddled, self-damaging station, were not included in the above profit calculations… It is conceivable that a hydrogen station that must continually replace failed valves, tanks, pipes, etc. to stay in safety compliance– may never reach significant levels of profitability.

Just WHO is going to be building all those expensive hydrogen stations? They certainly will NOT be owned locally by your average mom and pop entrepreneurs– that’s for sure.

EV’s are clearly much cheaper than FCVs at so many economic levels; supporting hydrogen just becomes a futile exercise in insanity.

Just keep sniffin’ that stuff, Dave…

What are you going on about?

Nobody can match the energy density of Tesla’s 18650 solution. And why did you say “right” energy density instead of “highest”? You think lower is better?!?

The fuel cell i3 will be a flop. I’ll bet you anything.

FCEVs are about PR and CARB credits. That’s it. Until I see an FC maker making billions of dollars in the stationary power market, where $300/kW is unheard of, I have no reason to believe they’ll reach the $50/kW needed for mass adoption in the automotive market.

Actually fuel cells, many of them of the same PEM type as are used in fuel cell cars, performed far better in hurricane Sandy than either batteries or diesel generators, with the former running out of power after a few hours and the latter breaking down far more often.

‘ Navigant Research forecasts that global stationary fuel cell revenue will grow from $1.4 billion in 2013 to $40.0 billion in 2022.’


Way to go Dave.

You have just amply demonstrated how your intense dislike of Elon Musk clouds your judgement and your every post here!


Davemart, you are so much more persuasive when you are not bashing somebody.

These posts are cringeworthy.

He might be right . . . when the fuel cells fizzle, they might have to come crawling back with their tail between their legs.

But I kinda doubt that. I assume that Toyota has a skunkworks PHEV and pure EV teams that can be built if their fuel cell pipedream fades.

Fuel cell and BEV are essentially the same vechicle other than energy storage. Toyota already has it’s EV if fuel cells are not adopted.

Well, battery storage is where Tesla has most of its technology.

And what Toyota EV are you talking about? The under-batteried Scion? The discontinued RAV4 that Tesla helps them on?

LOL at “other than energy storage”.

Energy storage is the toughest part of an EV. And after all these years Tesla is still destroying everyone in both pack density and cost.

Toyota’s lack of effort in both PHEV and EVs will give them no option but to buy packs from someone else and use their infrastructure if they ever decide to build EVs in earnest.

But I doubt that’ll happen. Their reputation for quality will keep them at the top of the ICE world for 50 years, and that’s good enough for them today.

The best bet for Toyota would be a 100 miles range ev equipped with their new direct free piston generator as a range extender. For the battery they could work with Tesla to reduce costs.

It seems like Musk’s technical and industrial ecosystem lead is so great, and market niche so predictably going to turn into a chasm, that he can announce stuff before any of his partners knows it’s in the cards. After he had twins, he probably said to his wife “I think we’ll have triplets next time” and his wife laughed at her silly Elon nonchalantly.

This will all be a moot point once the Zennergy Drive powered by EEStor is commercial by the end of the year ! 🙂

Wow, EEStor is a name I haven’t heard in about 3+ years! I can’t wait to see their product this year 😉

Ha! IIRC, in Sept 2008, EEstor was supposed to demonstrate a working prototype. All we heard were crickets.
Fast-forward to Sept 2014… the sound of those crickets’ great great great great great great great great great great great great great great great great great great great great great GRANDCRICKETS. 🙂

This could be as simple as Toyota needing a supplier for it’s FCV batteries… now that Tesla will be moving forward with it’s gigafactory it makes sense to think they could end up becoming a supplier of batteries to other auto manufacturers at some point… sure they expect all their capacity to be used up by their own production but having an outlet to sell batteries makes sense

Spec 9 said:

“He might be right . . . when the fuel cells fizzle, they might have to come crawling back with their tail between their legs.

But I kinda doubt that. I assume that Toyota has a skunkworks PHEV and pure EV teams that can be built if their fuel cell pipedream fades.”

Spec 9 is exactly right. All the major car companies are developing numerous alternatives to the straight ICE.

Most major manufacturers have numerous engineering groups working on any number of ICE alternatives and on improvements to the internal combustion engine itself.

Toyota has people working on electric cars and also batteries. In fact there is an R&D group at Toyota that just works on batteries.

Honestly, with Li-ion at $100/kWh (projected for gigafactory output), not even Toyota’s going to be able to maintain the fool cell fiction. It’s a serious mistake to take their “FC is the future” blather at face value – they’ve been playing the FC game for CARB purposes (the incentives are entirely out of whack for FC), but alt-energy vehicles are going to form a much bigger market than just CA, and the numbers don’t work for H2FC now, they never have, and they’re unlikely to any time soon.

There is also curious point that actually long range electric cars are cheaper than short range electric cars. This is because if 24 kWh EV battery has total lifetime 200 000 km, then 72 kWh EV battery has three times better total range of 600 000 km.

This more or less negates the higher cost of long range battery pack, especially in professional use, where capital expenses does not matter as much.

But there is even more curious point. With long range EV battery the charge level can be kept at optimum range between 30 % and 60 %. If charge level is within this range, there is virtually no cycling related cell degradation and calendar life related cell degradation is much slower compared if the charge level is kept in around 90 %.