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L.A. Auto Show: Elon Musk of Tesla talks RAV4, Model S and profitability

November 17, 2010 |  5:06 pm

Elonmusk After Toyota’s reveal of its new electric RAV4 prototype, Telsa Chief Executive Elon Musk talked for a bit about the partnership between the two companies.

Tesla will build the RAV4’s battery and some other powertrain components at its new Palo Alto facility. The basic RAV4 frame will be built at Toyota’s production facility in Canada. Musk is rooting for final assembly to take place at Tesla’s Fremont, Calif., factory, the former NUMMI plant.

It would be, he said, “kind of cool. There’s plenty of room. But that’s a Toyota decision.”

He brushed aside concerns that sharing the factory while ramping up Tesla production could hurt the progress of the company’s planned electric Model S sedan. Tesla is currently moving aluminum stamping and painting stations into the facility -- Musk is a self-professed “stickler for paint quality.”

Construction of a first Model S prototype is “shaping up really well,” Musk said. He hopes to have a drivable version ready by the end of the year and a display at the Detroit auto show in January. And a concept prototype of an electric SUV based on the Model S platform might be finished as early as the end of next year, he said.

But actual manufacturing of the Model S won’t start for several months, though the vehicle is scheduled to be delivered to customers starting in mid-2012. That’s not far from the projected release date of the RAV4. Does that mean more potential competition?

“They’ll be released very close together,” Musk said. “But they’re in very different markets as well.”

Besides, he said, the partnership with Toyota has been beneficial to both companies. Toyota gets a taste of Silicon Valley culture, and Tesla gets more insight into the auto production process and access to some Toyota suppliers.

“It’s a two-way street,” he said. “We’re learning a lot from Toyota bi-directionally.”

Tesla hopes to finally become profitable in 2013, following the first year of Model S production. The company is hiring roughly 50 people a week and will potentially have several thousand employees by the end of 2012.

But until then, the scale-up in manufacturing means that “it’s just not possible given the capital and R&D expenditures” to make a profit, Musk said.


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-- Tiffany Hsu

Photo: Jim Lentz, president of Toyota Motor Sales (left) and Elon Musk, Tesla chief executive (right), standing in front of the Toyota RAV 4 EV Concept car at the LA Auto Show. Credit: Lucy Nicholson/Reuters