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Tesla, Toyota Teaming Up to Build EVs in California and Reopen NUMMI

Tesla roadster

Tesla has been getting plenty of support from major automakers recently. First Daimler grabbed a 10% stake in the auto startup last year, and now Tesla and Toyota have revealed that they are teaming up in California to work on electric vehicles, parts, production systems, and engineering support. As part of the deal, Toyota will buy $50 million of Tesla's common stock once the company's initial public offering is complete. Tesla is also purchasing New United Motor Manufacturing Inc. (NUMMI), Toyota and GM's recently closed manufacturing plant in Fremont.

Toyota's California manufacturing operations have been dormant since April, when the company shut down production at NUMMI, which employed 4,700 workers. The plant had been open since 1984 and it produced almost 8 million vehicles. Now Tesla says that it will use the site—along with 1,000 factory workers (some rehired from NUMMI)—to manufacture its upcoming Model S sedan, set to be released in 2012. The startup chose the site because of its extensive automotive production infrastructure. And once production ramps up, Tesla could employ up to 10,000 workers.

The Tesla/Toyota partnership will provide benefits for all those involved. Tesla could use the cash infusion to pay for equipment and factories. The company can also get some much-needed expertise on the auto business from Toyota, which has been around since 1937. At the same time, Toyota can use some good press after its brake safety fiasco earlier this year. Toyota might also learn from Tesla's production of all-electric cars—up until now, Toyota has stuck with hybrids. And California gets a boost to its growing credibility as an electric vehicle hotspot.

Most importantly, this might just mark the beginning of electric cars going mainstream. Toyota is already known as a leader in the hybrid vehicle space, so it has a head start on other automakers. And Tesla has the reputation for building sleek, well-made electric cars. Put the two together to mastermind EVs, and who knows what could happen?

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