10 Years of Partnership with Toyota, Ignites EV Leadership for Tesla

• 9 July 2023
• Construction Focus
• 1965 Views

In a remarkable evolution over the past two decades, Tesla has emerged as the unrivaled leader in the electric vehicle (EV) industry, driven by a transformative partnership with Toyota in 2010. This collaboration, dissolved later on, bestowed Tesla with essential manufacturing expertise and its inaugural factory, propelling its extraordinary trajectory. Today, the tables have turned as Toyota seeks manufacturing guidance from its former partner, signifying a momentous shift in the EV landscape.

Acknowledging the necessity to adapt to a dynamic market, Toyota has recognized Tesla’s preeminence in the realm of EVs. As an executive overseeing production at a prominent Japanese carmaker remarked, “It’s finally come to the point for Toyota to learn from Tesla,” reflecting the astonishing journey. This realization has prompted Toyota to seek Tesla’s guidance in areas such as reducing EV prices and revolutionizing production methods.

Recently unveiling its groundbreaking gigacasting technology, Toyota intends to employ aluminum casts to manufacture large modules for its next-generation EV in 2026. While this represents an unprecedented advancement for the Japanese automaker, Tesla has already embraced a comparable innovation known as megacasting. Tesla’s implementation of megacasting, witnessed in the Model Y and across its lineup, has remarkably reduced per-vehicle costs by approximately 50%. Despite initial reservations, Toyota has now recognized the value of these advancements and is eager to follow suit.

A senior Toyota executive emphasized Tesla’s market leadership in EVs, stating, “Tesla is the market leader of EVs. We should learn from them.” This sentiment underscores the significance of the 2010 partnership, which, at the time, may not have foreseen Tesla’s current standing. Tesla’s CEO, Elon Musk, had expressed anticipation about learning from Toyota’s manufacturing technique, praising it as the “best in the world” during the initial announcement, highlighting the mutual respect between the two companies.

The collaboration between Toyota and Tesla proved fruitful, with Tesla securing $50 million and a 3% stake in the company, along with a portion of a former auto factory in California acquired for $42 million. This acquisition provided Tesla with a fully equipped facility, significantly mitigating its production challenges and acting as a stroke of luck. While joint EV sales under the partnership were limited, the collaboration served as a catalyst for change, offering invaluable insights for both companies.

As Tesla commemorates two decades of innovation, it faces new challenges as the industry’s foremost frontrunner. Its disruptive direct online sales model and relentless pursuit of cost reductions have revolutionized traditional automotive norms. However, Tesla now confronts the complexities of managing a large corporation, emerging formidable competitors, and evolving consumer sentiments, presenting fresh hurdles to overcome. Nevertheless, Tesla’s ascent, fueled in part by the lessons learned from its partnership with Toyota, has solidified its position as the undeniable leader in the EV industry.

• Technology and Engineering