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Toyota and Tesla team up

Tesla plans to add a prestige family sedan soon to its Lotus Elise-based Roadster (pictured) in a deal with Toyota which will also revive a dormant factory in the USA.

Toyota has bought a significant stake in Tesla, which plans to add a prestige family sedan soon to its Lotus Elise-based Roadster, in a deal which will also revive a dormant factory in the USA.

The NUMMI factory in Fremont, California - its name stands for New United Motor Manufacturing, Incorporated - was originally set us as a joint venture between General Motors and Toyota. But, just like the shotgun marriage between Toyota and Holden in the 1980s in Australia, the deal fell apart and production at the factory ended this year.

Now Toyota plans to assist Tesla to establish a giant new manufacturing operation at the NUMMI site as it taps into the American start-up company's expertise in electric-car technology.  It has bought a stake in Tesla costing more than $59 million and Toyota chief Akio Toyoda is bullish about the potential in the deal.

"I’ve felt an infinite possibility about Tesla’s technology. Through this partnership, by working together with a venture business such as Tesla, Toyota would like to learn from the challenging spirit, quick decision-making, and flexibility that Tesla has," Toyoda says.

"Decades ago, Toyota was also born as a venture business. By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business spirit,’ and take on the challenges of the future."

Tesla will build its upcoming Model S, although it is unlikely to approach the 500,000 cars-a-year production capacity at the factory.  The Model S was unveiled last year and has a target price in the USA of $49,900, a figure helped considerably by a government tax break, as well as a claimed range of 500 kilometres between re-charges.

"The Tesla factory effectively leverages an ideal combination of hardcore Silicon Valley engineering talent, traditional automotive engineering talent and the proven Toyota production system," said Tesla CEO, Elon Musk.  "The new Tesla Factory will give us plenty of room to grow."  But Tesla is still in its infancy and has delivered less than 1000 of its Elise-based electric Roadster sports cars to date.