(Reuters) - Toyota Motor Corp said it would take a $50 million stake in U.S. electric carmaker Tesla Motors, a move that gives the Japanese automaker a chance to repair its dented public image and vaults the California start-up on to the world stage.
The two companies said on Thursday they would cooperate on the development of electric vehicles, parts and production system. Separately, Tesla will take over a plant Toyota closed in the San Francisco area and build its upcoming all-electric Model S sedan at the site from 2012.
The David-and-Goliath handshake highlights a changing dynamic in the auto industry, where newcomers such as Tesla and BYD Co of China are challenging established players in the uncharted field of mass-produced all-electric vehicles.
At a joint news conference in California, Tesla Chief Executive Elon Musk described the investment as a "gesture of support" from Toyota Chief Executive Akio Toyoda, who approached him in a whirlwind corporate romance that included dinner at Musk's house and a test ride around Los Angeles in Tesla's pricey electric Roadster sport car over the last month.
Tesla aims to tap Toyota's expertise in mass production while Toyota wants to win back public support hurt by its Prius hybrid recalls and San Francisco Bay Area protests against its decision to close the plant that Tesla is buying.
"Toyota gets to save face in California and give the impression that they're beefing up their electric vehicle strategy, which is seen as lagging Nissan Motor's and Mitsubishi Motors'," said Tatsuo Yoshida, Tokyo-based auto analyst at UBS Securities.
"An investment of $50 million is not much for Toyota, and it seems like a win-win for everyone involved," he said.
President Toyoda, a licensed car racer who has pledged to turn the company founded by his grandfather into a more nimble one, said Toyota could learn a lot from Tesla's entrepreneurial drive.
"Toyota was once a start-up company," he said through a translator at the news conference, also attended by California Governor Arnold Schwarzenegger.
"Working with Tesla will provide us with a powerful stimulus," he said.
ELECTRIC RETHINK
