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Tesla and Toyota to Partner on Battery Cars

Silicon Valley start-up to take over old NUMMI plant.

by on May.21, 2010

Tesla is taking over Toyota's old NUMMI plant to produce the Model S sedan.

Already partnering with German giant Daimler AG, the aggressive little California battery car maker, Tesla Motors, has just jumped into bed with another major automaker.  This time, it will partner with Toyota and take over the plant the Japanese company was abandoning in the suburbs of San Francisco.

Toyota plans to invest $50 million in Tesla, which was founded by the Internet billionaire Elon Musk.  The State of California, meanwhile, will provide tax abatements worth another $20 million to help support Tesla’s takeover of the old NUMMI assembly line – which Toyota originally operated in partnership with General Motors.

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The facility will be used to produce Tesla’s second product line.  With production of the original Roadster winding down, the Silicon Valley start-up is getting ready to launch a sedan it has dubbed the Model S, starting sometime in 2012.

“I sensed the great potential of Tesla’s technology and was impressed by its dedication to monozukuri (Toyota’s approach to manufacturing),” said TMC President Akio Toyoda, explaining the decision to partner with the small battery car maker.  “Toyota was also born as a venture business,” he added, suggesting that, “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.”


Unions Target Weakened Toyota

Washington demonstration planned for Thursday.

by on Jan.27, 2010

Plans to close a California plant building this model, the Matrix, along with recent recalls, will have union members out demonstrating against Toyota on Thursday.

The International Brotherhood of Teamsters and the United Auto Workers Union are taking aim at Toyota Motor Corp. while it is reeling from the fallout of its decision to suspend sales of eight of its most popular models due to a safety defect.

Teamster president James P. Hoffa and UAW vice president Bob King will lead a delegation of labor representatives, environmental advocates and consumer protection advocates in a protest outside the Embassy of Japan in Washington, D.C. on Thursday.

The union leaders also plan to deliver a letter to embassy offiicials for Japanese Minister Yukio Hatoyama.  The letter will express concern that Toyota’s plan to shut a plant in California will ultimately hurt America’s perception of Japan.  It calls on the Japanese government to meet with union representatives and with Toyota management, Teamster and UAW officials said. The facility, known as NUMMI,and located outside San Francisco, has been Toyota’s only unionized plant in the U.S.

“After receiving millions in the taxpayer-funded Cash for Clunkers bailout, Toyota plans to close its New United Motors Manufacturing Inc. (NUMMI) assembly plant in Fremont, CA, which will mean a loss of 5,400 direct jobs and up to 50,000 jobs at suppliers and other supporting businesses. This would be the biggest factory layoff in California since the beginning of the recession,” union officials said in a statement.

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Environmental advocates at the event will express their disappointment that Toyota, a company that markets itself as a leader in emissions reduction, will greatly expand its carbon footprint by shipping vehicles once made at NUMMI back to the U.S. from Japanese plants.


How Detroit Helped Give Its Market Away

Transplants increasingly dominate U.S. production.

by on Sep.14, 2009

Detroit dared the Japanese to "build cars where you sell them." Initially reluctant, makers like Honda -- which opened the first Japanese auto "transplant," in Marysville, Ohio, in 1982 - soon embraced the idea.

Detroit dared the Japanese to "build cars where you sell them." Initially reluctant, makers like Honda - which opened the first Japanese auto "transplant," in Marysville, Ohio, in 1982 - soon embraced the idea.

Be careful what you ask for, goes the old axiom, as you just might get it.  Someone should have told that to Harold “Red” Poling, the former Ford Motor Co. Chairman, who liked to taunt the Japanese, back in the early 1980s, to “build them where you sell them.”

Back then, the imports were still a relatively modest, if fast-growing force, and buoyed by a lopsided exchange rate, makers like Toyota and Honda were able to sharply undercut their Big Three foes.  Eliminate the yen from the equation, went the conventional Detroit wisdom, and the imports would lose their competitive edge.

It was an era when the mantra, “Buy American,” still resonated with some buyers, especially when spoken by the likes of Lee Iacocca, the Chrysler chairman and consummate TV pitchman.

Transplant to

Transplant to

But what really mattered to the Asian makers was the passage of so-called “voluntary” restraints on Japanese automotive imports.  The severe limits initially appeared to provide a real advantage for Detroit, immediately reducing both the sales and share of brands like Toyota.  If there weren’t enough Corollas, import-oriented buyers would have to settle for Ford Escorts and Chevrolet Cavaliers.  Better yet, Detroit could raise its prices – by hundreds of dollars per vehicle, according to research of that era, since it didn’t have to compete so hard.