Toyota and Tesla Team Up in Silicon Valley

Six days ago Tesla Motors announced that it had bought Toyota's old NUMMI assembly facility in Fremont, California. Fremont is less than an hour drive from Palo Alto, and the rest of Silicon Valley, where Tesla was founded and is currently headquartered. Considering the plant just closed down in April, the timing couldn't have been better for Tesla which plans to use portions of it to manufacture its Model S.

The Nummi plant was first opened in 1962, having been built by General Motors. After 20 years of operation it closed in 1982 and then reopened in 1984 as a joint operation between Toyota and GM with the goal of improving processes and knowledge between the two companies. Now, in 2010 the plant is seemingly repeating those steps only this time there will be no union involvement and the partnership will be focused on improving the efficiency of the cars themselves and not just the manufacturing operation.

The Tesla Model S is slated for release in 2012, the same window that Toyota plans to release a fully electric model of its own. Domestic manufacturing ensures support from the federal government for Tesla which has already received numerous grants and $465 million dollars of US government loans. Toyota has taken a business interest in Tesla and pledged to buy $50 million dollars of common stock when Tesla eventually goes public.

Toyota has been facing a lot of backlash in recent years for accidents involving involuntary acceleration and brake failure. Some have attributed these issues to computer malfunction but the exact cause remains unknown. This partnership may represent an opportunity for Toyota to improve its electronics and license software from Tesla, while Tesla in exchange could leverage components and manufacturing from the worldwide leader in reliability.