NEW YORK (TheStreet) -- Tesla (TSLA) CEO Elon Musk made comments in Tokyo over the weekend to the effect that he envisions cutting another deal with Toyota (TM) sometime over the next two to three years. Whether he meant supplying battery packs, or an entire car, to Toyota, wasn't immediately clear.
This comment was odd and curious. Musk had been poking fun of Toyota over the past year for his belief that Toyota rejected battery-electric cars in favor of hydrogen fuel cell cars. The Japanese automaker plans to start to produce hydrogen fuel cell cars in the coming months.
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Toyota's focus on hydrogen fuel-cell cars had been viewed as a positive for Tesla, because that meant one fewer competitor. And with hydrogen fuel cell cars several years away from being produced in large quantities, Toyota won't be much of a threat to Tesla, at least in the near term. As a result, Tesla's stock has soared 69% over the past year.
If Toyota is considering adding battery-electric cars on a significant scale across multiple continents, what would a deal with Tesla look like?
First, let's consider that Toyota and Tesla share the same battery vendor, Panasonic (PCRFY) . Toyota has been using Panasonic since before Tesla was founded. There is nothing that says that Toyota isn't considering a variety of battery vendors for use after 2016. For Toyota to continue to use Panasonic is one option indeed.
Panasonic has agreed to rent some space inside Tesla's future Nevada factory, and invest at least $200 million in equipment there in the years leading up to 2020, in order to produce battery cells for Tesla. This factory will be capable of operating at full capacity in 2020 according to Tesla.
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