Tesla to End Supply for Toyota's RAV4 - Analyst Blog
May 12 2014 - 5:00PM
Zacks
Tesla Motors, Inc. (TSLA) plans to stop supply
of battery packs and motors to its partner Toyota Motor
Corp. (TM) this year, according to sources. Toyota uses
this battery pack and motor in its electric vehicle RAV4.
Toyota owns a 2.4% stake in electric vehicle producer, Tesla.
Toyota was supposed to buy Tesla’s components for 2,600 electric
RAV4 vehicles over a three-year period. However, Toyota is expected
to end the current RAV4 electric vehicle model this year. As a
result, Tesla plans to end production activity under this program.
Supply to Toyota generated $15.1 million in revenues for Tesla.
Tesla is now focused on its global sales expansion of Model S
sedans and launch of the electric Model X crossover in 2015. It is
also planning to launch a lower-priced rechargeable sedan in the
coming 2–3 years. The company is also increasing its supply of
components for Daimler AG’s (DDAIF) electric
Mercedes B-Class.
In order to deal with the shortage of lithium-ion batteries, Tesla
is building a Gigafactory to produce the batteries in collaboration
with various partners. The construction work will commence this
year and is predicted to complete by 2017. By 2020, Tesla expects
the annual lithium-ion battery production of the Gigafactory to
exceed global production in 2013.
The factory will produce enough battery packs to allow Tesla to
build around 500,000 electric cars by 2020. It will also reduce the
‘per kWh’ cost of production of battery packs by over 30%. The
automaker expects the factory to provide economies of scale and
reduce production costs based on innovative manufacturing
techniques, reduced logistic wastes, optimization of processes and
lower overhead costs.
Tesla currently carries a Zacks Rank #5 (Strong Sell).
Volkswagen AG (VLKAY), a Zacks Rank #1 (Strong
Buy) stock, is currently performing well in the automobile
industry.
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