Highlights
- Rumours of Tesla and Toyota exploring a partnership has been reported since March.
- Currently, it’s a big claim with anonymously-sourced details, but one that's been parroted by motoring press.
- Neither Toyota nor Tesla confirmed the report, but they had worked together in the past with the EV RAV4.
- Auto business faces huge disruption by artificial intellegence and new, energy-efficient battery technology.
Tesla is tops in electric vechicle (EV) design, vision-based artificial intelligence (AI) self-driving technology and battery-for-vehicles manufacturing. Toyota is tops in making reliable vehicles by the millions. Toyota made 9.2 million in 2020, Tesla made 520k units. Now try putting them together.
That's what one report that emerged from South Korea claimed. Toyota, founded in 1937, has a current market capitalisation of $291 billion. Tesla, founded in 2003, just hit $1.06 trillion in market capitalisation on November 10.
It’s a complex and unsure equation right now. Here, we unpack the report:
What’s the basis for the 'partnership' report?
It’s a highly speculative one. On March 29, 2021, South Korea's Chosun Ilbo published a report about a partnership between Toyota and Telsa being "re-started".
The influential newspaper cited an unnamed "Japanese auto industry official" as saying that "Toyota and Tesla have entered into final adjustments for a joint development" project. It suggested an SUV jointly developed by Toyota and Subaru, or a mass-produced specification of the Toyota "X Prologue" concept.
Finer points of the deal had been under discussions since 2020, the report added. It also gave rough outlines of the plan that would combine Toyota's just-in-time manufacturing and engineering know-how with Tesla's expertise in software and control systems for EV powertrains. The goal would be to roll out a new platform that would be used for a smaller SUV.
Toyota dismissed it as "speculation". Tesla is mum on the issue. Still, the rumours won't die.
He has said for years that Tesla's patents are "open sourced". Tesla now allows other electric vehicles to charge their batteries at its "Supercharger" stations.
Tesla's Autopilot and "Full Self-Driving" beta technology have clocked up billions of kilometres, collected from Tesla owners and used to "train" its AI driving system. The company, however, had been constantly under fire from the media and safety organisations.
What did the report claim?
Here’s a translation from Korean language of the Chosun Ilbo report:
“It is heard that Tesla and Toyota have been reviewing their partnership since last year and are nearing the final stage. According to an official from the Japanese auto industry on the 28th (March), Tesla and Toyota are considering co-developing a small electric SUV platform as the basic frame of the car
“The alliance review has been under way since last year. The main goal of the alliance is to provide Tesla with a vehicle platform, and for Tesla to provide Toyota with some of the electronic control platforms and software technologies installed in its vehicles.
“If the partnership with Toyota is established, Tesla will be able to use the Toyota platform to offer a small SUV electric car at a low cost. In addition Tesla's sales in Japan, which is around 1,000 units a year, are likely to increase significantly.
“Tesla CEO Elon Musk said in September last year that 'We will offer a $25,000 (half price) electric car in 2023’ at its new technology open event Battery Day. However, many experts say it would be difficult for Tesla to find a way to build an electric car at such a low price.
“Tesla released a semi-medium-sized electric vehicle Model 3 in 2017 and a medium-sized electric SUV Model Y in 2020, to be followed by an electric pickup truck CyberTruck within this year. However, no specific details of the ‘half-price electric vehicle’ that it plans to release in 2023 are known yet.
“Meanwhile Toyota could also use Tesla technology to greatly reduce the resources and time spent on innovation of its vehicles' integrated Electronic Control Unit ECU and Operating Dystem OS. “Toyota is said to have fallen behind Tesla in integrated ECU and OS technologies that can control and improve vehicle functions through wireless Over The Air OTA updates.
“In other words, through cooperation between the two companies, Tesla can reduce the cost and period of developing small electric SUVs and Toyota can reduce the cost and duration of developing ECU and OS. It aims for a Win-Win effect that reduces the time it takes for the two companies to complement each other's weaknesses so that they can focus more on their strengths.”
What did Toyota and Tesla say?
A Toyota spokesperson said: “We would like to refrain from commenting on speculations.” No comments came from Tesla specifically about the report.
Did Toyota work with Tesla before?
Yes. There’s a sort of mutual admiration between the two, though in reality, they have taken different approaches to their business.
In 2010, Toyota signed a partnership with Tesla. At that time, Toyota President Akio Toyoda said his company can learn from Tesla's “quick decision-making and flexibility.” It was one of the main motivations behind the partnership, said Toyoda.
Tesla CEO Elon Musk has long admired the Japanese company.
In May 2010, as the emerging alliance took shape, Musk called the partnership “historic”. In describing his test drive of the Tesla Roadster in 2010, Toyoda, said he felt “the wind of the future.” Must stated then his company can learn a lot about vehicle production from Toyota.
In 2011, the two started to jointly develop RAV4 electric vehicles in Canada. They later sold about 2,500 units over three years. It was a tumultuous partnership: some culture clashes emerged, marked by product recalls. The partnership ended in 2014. In 2016, Toyota formed its own unit to develop electric cars.
How much of Tesla does Toyota own?
Toyota held 1.43% in Tesla as of July 2016, according to Bloomberg data. In 2010, Toyota acquired a $50 million stake in Tesla as automakers were competing to introduce less-polluting vehicles in the US. Toyota shuttered its Fremont, California factory to Tesla for $42 million.
In 2017, Toyota sold its last shares in Tesla.
What did the report say the Toyota-Tesla partnership would look like?
The report, though a highly speculative one, sent auto industry watchers in a tizzy.
The report simply stated that "if" a partnership with Toyota is established, Tesla will be able to launch a compact SUV EV at low cost using a Toyota platform.
Toyota’s car production has seen a 11% drop in 2020 from 2019. Tesla’s went up nearly 40% during the same period. Tesla has no problems with demand for its EVs. The Cybertruck has unofficially racked up 1.25 million pre-orders so far. In China, the Model Y is sold out till 2022.
Gulf News’ take:
Unless there’s a confirmation from both companies, it’s hard to take a single-sourced report seriously. The source is also anonymous, which weakens the story. Right now, it’s just a claim, one that needs solid proof.
That is not to say it’s impossible. There’s no denying the mutual administration Musk and Toyoda had for each other. Elon Musk, the world’s richest billionaire, who opts to live on a small rented pre-fab house, has demonstrated great efficiency in utilising capital.
Tesla pushed the transition to EVs no other carmaker has done, thus making sustainable transport possible today. Recently, Toyota introduced its first full-EV crossover, the bZ4X, allowing it to return to the EV game.
At the moment Tesla seems ahead in EVs, particularly on self-driving software development. Its sister company, SpaceX, made astronaut launches possible at record-low prices, allowing for LIDAR-guided autonomous docking with the International Space Station while landing booster rockets back to earth autonomously and falling straight down, ready for quick re-use.
If such genius in rocket science were to be applied to car manufacturing, it’s not hard to imagine massive changes that could disrupt transportation. If indeed the world's Top 2 automakers do strike a joint venture to make EVs more appealing in price and reliability, it would seem like a partnership the world had already seen before, but with fresh implications yet untold.
