In a surprise move, Tesla and Toyota have announced they're teaming up in a partnership that will see the Silicon Valley electric vehicle (EV) pioneer and the world's largest automaker work together on the development and engineering of future EVs as well as on related EV components and technologies. The deal includes a commitment by Toyota Motor Corporation (TMC) to purchase $50 million in Tesla stock when the Palo Alto, California-based firm finally consummates its planned IPO.

As part of the agreement, Tesla will purchase the recently shuttered NUMMI (New United Motor Manufacturing, Inc.) plant in nearby Fremont. Formerly operated by Toyota and GM, it will be revamped to serve as the home to this combined effort -- as well as become the final assembly point for Tesla's upcoming Model S Sedan. Prior to the announcement, Tesla's CEO Elon Musk had virtually completed final negotiations to build the more affordable Model S at a facility in Downey, just outside of Los Angeles.

Sparking new enthusiasm

Both Tesla and Toyota see this fledgling matchup as having big long-term upsides. In commenting on the agreement, TMC President Akio Toyoda noted: "I sensed the great potential of Tesla's technology and was impressed by its dedication to monozukuri (Toyota's approach to manufacturing). 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. 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."

For his part, Musk was equally enthusiastic, observing: "Toyota is a company founded on innovation, quality, and commitment to sustainable mobility. It is an honor and a powerful endorsement of our technology that Toyota would choose to invest in and partner with Tesla. We look forward to learning and benefiting from Toyota's legendary engineering, manufacturing, and production expertise." This linkup also should help stimulate investor interest in Tesla's pending move from private to publicly-held operation.

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