Tesla Won’t Renew Battery Contract For Toyota RAV4 EV

toyota-rav4-ev-2

By the end of the year, Tesla’s contract to supply battery packs for the Toyota RAV4 EV will come to an end, and Tesla won’t seek its renewal. With battery production bottlenecking Tesla Model S sales, the one-time win for the electric automaker has likely turned into a liability…and nobody seems all that upset about the end of the program.

Certainly not Toyota, which only built the RAV4 EV to satisfy California’s zero-emissions vehicle policy, and has actively discouraged sales outside the Golden State. For Tesla, the contract was worth about $15 million in the first quarter of 2014, and about $100 million in total, which certainly isn’t chump change. But it’s  a drop in the bucket compared to Tesla’s $25 billion stock valuation, and I don’t think Tesla’s coffers will miss it. The partnership between Toyota and Tesla isn’t totally over though, as the two still share the former NUMMI factory in Fremont, California.

Tesla is also under contract with Daimler to provide battery packs to the Mercedes B-Class Electric Drive, which just began production. Every battery pack it builds for a competitor is one less battery pack for a Tesla product, and it’s little wonder why Elon Musk wants to break ground on the Gigafactory as soon as possible.

Toyota, for its part, wants to move away from electric cars altogether, planning to start selling an as-yet-unnamed hydrogen fuel cell vehicle in California next year. That likely means the end of the road for the RAV4 EV, but perhaps not for Toyota and Tesla’s relationship.

Source: Automotive News

 

Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.