Toyota sells stake in Tesla as partnership dies

Share disposal comes as Toyota prepares to launch its own purely electric car

Tesla vehicles charge at a Tesla Supercharger station on the Qualcomm campus in San Diego, California.  Photograph: Mike Blake/Reuters

Tesla vehicles charge at a Tesla Supercharger station on the Qualcomm campus in San Diego, California. Photograph: Mike Blake/Reuters

 

Toyota, the Japanese carmaker, has sold the last of its stake in Tesla as the electric car pioneer changes from potential ally to fierce competitor.

The sale – which was completed by the end of 2016 but announced on Saturday – highlights how Toyota’s strategic partnership with Tesla has fizzled out.

The share disposal comes as Toyota prepares to launch its own purely electric car and as it steps up investment in a range of future technologies, from hydrogen fuel cells to self-driving vehicles.

The company said it had made the decision to sell after a “periodic review” of its investment portfolio.

Toyota bought roughly 3 per cent of Tesla for $50 million in 2010 as part of a deal that included the sale of its assembly plant in Fremont, California to Elon Musk’s electric car start-up. At the time, Tesla had made only a tiny number of high-end electric sports cars, but in 2012 it launched the highly successful Model S.

At the time of the investment, Toyota president Akio Toyoda said he hoped the partnership would inject some of Tesla’s start-up management culture into the Japanese carmaker.

“Toyota would like to learn from the challenging spirit, quick decision-making and flexibility that Tesla has,” Mr Toyoda said.

Fizzled out

But the partnership had fizzled out by 2014, partly because of the culture clash between Toyota’s conservative, safety-first engineering and Tesla’s risk-taking, Silicon Valley approach.

Toyota stopped selling the RAV4 EV, a jointly-developed electric sport utility vehicle, and sold part of its stake in Tesla later that year.

As of March 2016, Toyota held 2.34 million shares in Tesla with a balance sheet value of Y53.1 billion ($481 million), according to company filings. Given Toyota sold all of its stake before the end of 2016, it is likely to have received roughly that amount. Tesla shares have risen sharply this year.

Toyota’s decision to sell emerged in response to questions after Tesla opened a store in the car giant’s home city of Nagoya, central Japan, showing its transition from quirky start-up to mainstream competitor.

Hybrid

Even though Toyota pioneered the hybrid gasoline-electric Prius in 1997, making it one of the best-placed car companies to launch an all-electric vehicle, doubts about range, cost and battery durability have made Toyota reluctant to enter the market.

Tesla’s success, combined with ever more stringent global emissions standards, have prompted a change of heart. Late last year Toyota signalled it plans to enter the crowded market for electric vehicles.

However, Toyota still has doubts about the potential of batteries. It continues to invest heavily in hydrogen fuel cells, an alternative technology that Mr Musk of Tesla has publicly dismissed as “incredibly dumb”.

– (Copyright The Financial Times Limited 2017)