New Electric RAV4 Means Toyota and Tesla are Gunning for Lotus

Yesterday, Toyota confirmed that it would be collaborating with Tesla to bring its previously-discarded RAV4 EV back to life, after a nearly 10 year hiatus in production.

On the surface, this is great news—look deeper though and it seems the new Toyeslas won't be winners, but this story isn't about new Toyeslas… this is a story about Toyota getting their grubby little mittens on Lotus' world-beating technology on the cheap.

What the heck am I talking about? Find out, after the jump.

On the surface, the story of Toyota and Tesla began earlier this year, in May, when Tesla announced that Toyota had signed a letter of intent to have Tesla build a pair of concept EVs. Tesla had plenty of reasons for letting the cat out of the bag here, sure – boost stock price, encourage investors, etc. It could also be seen differently, however: as a veiled threat to Lotus—and THAT is where this story begins.

See, Lotus is discontinuing the Elise chassis that the Tesla Roadster is based on. Tesla's new Model S sedan won't be ready for 2011, which means that Tesla will—very shortly—run out of cars to sell.

Running out of cars to sell is bad.

It seemed that Tesla was screwed, and Lotus' restructuring was to blame. Tesla, however, are no dummies. The company's CEO, Elon Musk, cut his teeth in Silicon Valley, circled by cut-throat IP lawyers, corporate bullies, and market strategists with IQs that look like area codes—and he learned Silicon Valley's lessons well.

Recognizing that running out of cars was a problem, Tesla courted Toyota. Once Toyota reluctantly agreed to let Tesla build 2 prototypes to “prove” the efficacy of the Tesla batteries, Tesla ran a major PR campaign—effectively using their marketing clout and shimmering green halo to force a troubled Toyota into a PR corner it couldn't escape from.

Toyota, then, was forced to bargain with Tesla, but Tesla's senior staff had something beyond money in mind when they finally got Toyota brass to the closed-door bargaining room. Tesla explained that they and Toyota had a common enemy: Lotus… and the enemy of my enemy is my friend.

Why all the closed-door theatrics? Toyota didn't realize Lotus was a threat.

A little background is in order, I think, for non-obsessives. See, Toyota supplies a number of engines to Lotus' products. The Lotus Elise uses the Corolla's 4 cyl., the Lotus Evora uses a Camry V6, the rumored Lotus Esprit will use a Lexus engine, and so on. Lotus' future, however, isn't about Toyota—Lotus' future is about cutting edge hybrid technology.

Toyota would prefer that you think of TOYOTA, rather than Lotus, when it comes to cutting edge tech—and while that may be the case here in the US, selling cars in the 21st Century is all about emerging markets, and Lotus' parent company, Proton, is poised to become a major player in markets where Toyota does not already have an established foothold.

What to do?

If you're a Silicon Valley software company, you buy your competitor and shut them down. Tesla didn't have the cash to buy Lotus, so they enlisted Toyota.

Toyota can't buy Lotus, but they can force Lotus to keep supplying Tesla with Roadster chassis, at least until the Model S is ready. If Lotus doesn't obey, Toyota can make getting engines for their gas-engined cars “difficult,” if not impossible.

What does Toyota get out of all this? A stake in Tesla… which, in itself, is worthless right now and for the foreseeable future (Toyota needs Tesla like NASA needs my model rocket collection) but it has its benefits: investing in Tesla is a PR windfall for Toyota, cementing Toyota as a forward-thinking company that is invested in the US economy, a company that cares, re-opening the NUMMI plant and employing thousands of Americans… who won't buy Teslas, of course—but they will buy Toyotas.

All of which begs a certain question: what does Toyota want from Lotus?

I would bet that Toyota wants an Omnivore range-extending ICE in its iQ minicar and maybe some ultralight construction technology to help it keep the CAFE dogs at bay, but (mostly) Toyota doesn't want Lotus to get away with what they're planning to do: dominate the hybrid car market in emerging countries…

…that's Toyota's job.

SOURCES:  Toyota, The Truth About Cars, my own troubled mind.

IMAGE SOURCE:  Jalopnik.

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