Tesla to Stop Supplying Batteries for Toyota RAV4 EV

Tesla Motors announced that the $100 million deal to supply Toyota with battery packs and motors for the RAV4 crossover will end this year. In May 2012, Toyota said it would buy Tesla’s components for 2,600 RAV EVs over three years.

Even though Tesla CEO Elon Musk had said he expected Toyota to extend the agreement, it appears that Toyota will end it, although there isn’t any official confirmation from the Japanese automaker.

Toyota is expected to end the current RAV4 EV (pictured) model this year. Our production activities under this program are expected to end in 2014,” Tesla said in a quarterly filing. The supply deal generated $15.1 million of revenue for Tesla in the quarter that ended March 31.

“This was a project for a specific number of vehicles that we planned to sell for a specific number of years. We have not made any announcement about the relationship or what we’ll do with Tesla in the future,” Toyota spokesman John Hanson was quoted as saying by Bloomberg.

Tesla will not be left with overcapacity problems though, as the company expands global sales of Model S sedans and prepares for the launch of the Model X electric crossover next year, as well as a mass-market sedan scheduled to launch in two or three years. Tesla is also increasing production of components for Daimler AG’s B-Class Electric Drive as it prepares to start construction of the Gigafactory battery plant.

Toyota sells the RAV4 EV mainly in California and delivered 1,594 units since 2012 through April this year. Next year, Toyota will begin California sales of a hydrogen fuel cell sedan.

By Dan Mihalascu

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