A plan to sell an electric version of Toyota's RAV4 sport utility vehicle two years from now demonstrates that the alliance between Tesla Motors Inc. and the Japanese automaker is more than just window dressing, analysts said.
Tesla and Toyota Motor Corp. said Friday that they were developing the vehicle and that Tesla was working on a fleet of prototypes to begin testing.
The venture is the first project announced by the companies since Toyota purchased 3.2% of Tesla for $50 million this year.
"This decision shows concrete results from a partnership that raised many eyebrows. It is now starting to appear that maybe Toyota needed Tesla's technology as much as Tesla needed Toyota's investment," said James Bell, an analyst with auto information company Kelley Blue Book.
Other analysts agreed.
"Toyota's willingness to partner with Tesla to provide an electric version of one of the Japanese automaker's existing vehicles suggests the partnership between the two companies is going to be a meaningful one," said John Boesel, chief executive of Calstart, a clean-transportation technology trade group based in Pasadena.
It's also good news for consumers looking for an electric vehicle larger than the Chevrolet Volt, Nissan Leaf or Ford Focus — electrics coming to the market over the next several years, analysts said.
"The e-RAV4 will help expand the market for electric vehicles by giving 'soccer moms' and small-business owners a vehicle they can use on a daily basis," Boesel said.
Tesla is trying to move past its reputation as a niche builder of high-end vehicles into the mainstream market. The Palo Alto company, which last month became the first U.S. automaker to float an initial public stock offering since Ford Motor Co. in 1956, currently sells limited numbers of $109,000 Roadsters.
It is also working on the $57,000 Model S sedan, which it plans to start selling in 2012. Tesla says the Model S will be able to accelerate from zero to 60 mph in less than six seconds and will have a range of 160 to 300 miles on a single charge.
Tesla will begin making the sedan next year after it reopens the New United Motor Manufacturing Inc. plant in Fremont, Calif., which was formerly operated jointly by Toyota and General Motors Corp. Tesla acquired the plant this year after Japan-based Toyota said it would no longer build cars in California.
News of the announcement pushed Tesla shares up 75 cents, or 3.8%, to $20.64 on Friday. Toyota shares fell $1.65, or 2.3%, to $70.75.
Toyota has made a limited number of electric RAV4 autos but has never commercialized them. About 1,500 of the RAV4 EVs were built between 1998 and 2003. Most of the autos were sold to fleet customers such as utilities and government agencies for research and development purposes. But about a third were sold or leased at retail. They sold for $42,000 or leased for $329 a month, according to Toyota.
More than 800 of the vehicles are still in service, Toyota said. The vehicles have a range of about 100 miles.
"The Toyota RAV4 EV has been a terrific workhorse for the past decade. Hundreds of the original cars are still running seven to 10 years after manufacture in both fleets and private hands," said Paul Scott, a residential solar-panel salesman and member of the Plug In America electric vehicle advocacy group.
"My car has 84,000 miles on the odometer and still runs exactly the same as the day I got it," Scott said.
Scott said he would look forward to an updated version with some of the modern conveniences that have been developed since his RAV4, a 2002 model, was built.
"Toyota used a bare-bones platform with precious little in modern conveniences such as cruise control or GPS. The instrumentation is also primitive by today's standards and could be much more informative … giving us information on the state of the charge and voltages, etc.," Scott said. He said he would also like a little more back-seat room.
Toyota, known for its Prius hybrid, has said it was developing an electric vehicle to sell in 2012. It will be a small urban vehicle with a short range. The electric RAV4 would "complement" that vehicle as a larger auto that has more range but would also have a higher price, said Mike Michels, a Toyota spokesman.
The companies did not say where the new-generation electric RAV4 would be built or for how much it might sell. A conventional gasoline-powered RAV4 sells in the low- to mid-$20,000s.
Each of the automakers stands to benefit from the program, Kelley Blue Book's Bell said.
"Toyota gets to reenergize a model that has grown somewhat stagnant in the market and is no longer considered an innovative option in the small crossover space, and Tesla can further monetize and prove that their style of battery and energy management can support large-scale usage," Bell said.