Toyota vs Tesla: Perhaps Electrification Wasn’t The Better Deal After All

Tesla Model X
Tesla Model S

Recent news releases announced that the party was just about over. After four years, and $150 million in development money, Toyota and Tesla Motors have decided to part ways at the end of its 2014 supply-chain agreement, while clearly suggesting an alternative technological future for the giant Japanese auto-maker.

“It’s obvious (that) Toyota doesn’t see a market for electric vehicles,” says Edmunds green analyst John O’Dell. “They really see the future of the zero-emission vehicle as the hydrogen vehicle,” he concluded.

“In partnering with Tesla, there might have been a message that Toyota was looking at the possibility of a wider partnership with the Silicon Valley manufacturer,” he continued. “But (Toyota) can’t even give (the RAV4) away. (So) why continue doing this?”

Clearly, the suggestion of a wider partnership was on the table when Toyota put $150 million into Tesla between 2010 and 2011, thereby, creating a 3% stake in the all-electric carmaker. Although the infusion of fresh capital certainly helped the San Carlos operation hold the financial wolf at bay until CEO Elon Musk could completely consolidate his ownership position, while creating additional supply deals including Daimler Mercedes, over time, however, the blush began to fall from the lily.

From a dollars and cents perspective, Toyota’s RAV4 never managed to strike a chord with the buying public yet, all the while; sales were continuing to be quite brisk for the company’s gasoline-electric variants. Then, along the way, Honda, Hyundai and others began to get serious about rolling out hydrogen cell technology as a tipping point toward the ‘next big thing,’ particularly since H2 technology clearly offered longer range, and reduced maintenance complexity. Or, in the end, a simple sense that perhaps Toyota needed to get into the hydrogen game, or lose the ability to play at all was at work; none of us can know for sure.

However, according to 2010 comments referencing to the original Tesla deal, Toyota’s CEO Akio Toyoda said, “When customers do give us their answer,” he said, “I want the company to be ready.” And it appears that those comments apply in 2014 as well, in the case of watching the company move away from its current all-electric thinking toward H2, and the evolution of a potential Toyota FCEV. Either way, watching the show alone should be worth the price of admission.


  1. Awesome X picture! Haven’t seen that one before.

    Thrilled Toyota is removing itself from BEV race. Tesla needs to succeed, and SERIOUS, FULLY COMMITTED competition from too many biggies might prevent that.

    Idk who will buy hydrogen electric, its not me. I HATE going to the pump. Its not even the paying, its the going in snow and rain, or just having that tether. Inconvenient unpleasant waste of time.

    They seem to be looking at the wrong group. The new uninformed public is afraid of EV, but once informed there is a huge perception shift. Not sure why they are looking at opinions of the ignorant, people don’t stay ignorant.

    When ev knowledge jumps the chasm from early adopters to early majority, EV sales won’t be far behind. The pattern is visible if you watch for a while.

    • Ignorant? Steve Jobs said “It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That’s what we get paid to do. So you can’t go out and ask people, you know, what the next big [thing.] There’s a great quote by Henry Ford, right? He said, ‘If I’d have asked my customers what they wanted, they would have told me ‘A faster horse.’ ”

      TMC has said that they don’t believe a BEV is the right solution for several years now (That’s not Tesla Motor Company). They would like to move forward with the tradition of the Prius and are deciding how to plan the marketing for their FCEV under the Lexus and Prius banners in the US as we type.

      The Toyota FCEV will be on sale by April 2015 in Japan, according to TMC, for $70,000. No word on if this is subsidized, and even if it were it is very difficult to determine when, and what, were the level of subsidies, and by whom, for TMC cars sold in Japan. US pricing has not been announced.


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