Toyota working with Tesla toward vehicle prototype

Toyota Motor Corp is working to develop a prototype electric vehicle with Tesla Motors as it continues work on a battery-powered small car the Japanese automaker plans to launch in 2012, senior executives said.

"We're at the stage of working towards a prototype and once that's completed and we've reached that milestone, I'd like to announce more about what we're working on together," Toyota president Akio Toyoda told reporters.

Toyoda said Toyota was interested in experimenting with Tesla's approach to using lithium-ion battery cells developed for the electronics industry as a potential alternative to developing batteries tailor-made for its own vehicles as it had been doing.

"We'll see which better meets the needs of consumers. We're taking a multifaceted approach," Toyoda told a group of US reporters invited to tour Toyota's facilities this week.

The comments represent the most detail Toyota has provided about the scope of a still-developing partnership with Tesla announced in March by Toyoda and Tesla chief executive Elon Musk.

Toyota invested $US50 million in Tesla in a private placement after the electric vehicle maker's initial public offering in June. After zooming 40 per cent on their first day of trading on June 29, Tesla shares have come back to earth and are trading slightly below their initial public offering price of $US17.

Toyota executive vice president Shinichi Sasaki said the world's largest automaker was open to other partnerships like its Tesla deal since it believes a number of alternatives to traditional gas engines could find a market in the next few years.

"It's hard for a single company to take on environmental technology all alone because of the need for infrastructure. I think cooperation is going to be increasingly important," Mr Sasaki said.

Toyota's tie-up with Tesla was seen as a strong endorsement of the seven-year-old start-up and credited with driving investor interest in the company best known for its $US109,000 electric Roadster.

Musk has said Toyota would be a customer for Tesla, which also has a deal to supply battery packs to an electric version of the Smart mini-car for Daimler AG.

But in the absence of a contract, it had been less certain what Toyota aimed to gain from the tie-up, which was negotiated in less than a month after Toyoda met Musk for the first time in Los Angeles.

The Roadster is powered by more than 6,800 laptop battery cells and can accelerate to 60 miles per hour from a standing stop in less than four seconds, faster than all but a handful of luxury sports cars.

Toyoda said he was impressed by the car and by Tesla's start-up culture, which he said he hoped would contribute to his effort to revitalize Toyota after a safety crisis earlier this year marked by the recall of about eight million vehicles.

Tesla's approach

Mr Sasaki said he considered Tesla's approach to using off-the-shelf battery components "shocking," but suggested that it could open the door to lower costs for Toyota if the Tesla battery system holds up to quality standards.

"At Toyota we have a lot to learn from this partnership. We've just begun working with Tesla but I believe that we've taken an important first step," Mr Sasaki said.

A team of Toyota engineers is continuing to work on a small, urban car powered by batteries for launch in 2012, company officials said. Toyota showed off a prototype of that car based on its IQ mini-car in 2009.

Toyota dominates the market for traditional hybrids with its Prius and had been less enthusiastic about the size of the developing market for pure electric cars than rivals led by Nissan Motor Co.

Toyota will assemble a team of engineers from its US research and manufacturing arm to work with Tesla on the joint prototype the companies will develop, a Toyota spokesman said.

Separately, Toyoda said the automaker had taken the first steps toward winning back consumer trust in the wake of its recent safety crisis.

The automaker has slowed product development, dispatched more engineers to work on safety issues and given its US management team a stronger voice in making the determination on whether to recall a vehicle.

US safety regulators said Toyota was too slow to react to safety problems and the recalls hurt Toyota's sales and damaged its reputation for quality.

"We are listening hard to what our customers have to say and we are working hard to earn their continuing trust," Toyoda said.

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