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Last Nail in the Tesla – Toyota Partnership?

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Tesla-logoWhile all other major car makers are either improving or developing battery electric vehicles, the world’s largest automaker seems to be going the opposite direction. After hinting that they are pursuing hydrogen fuel cells, the Japanese car maker is unloading its stake in Tesla (TSLA).

The move comes on the heels of Daimler-Benz’s divestiture of its 4% ownership in Tesla.

Toyota is doing so at a huge profit, after holding on to the stock since May 2010, adding US$780M in the process. They acquired the stock for $50M a few weeks before Tesla’s IPO in a deal made shortly after a meeting of Toyota’s top brass with Elon Musk. The IPO price was $17/share and is currently selling for $238/share, a gain of 1400%.

Also part of the deal was a supply agreement where Tesla provided batteries to the Toyota RAV4 electric SUV, which is being phased out this year. It also allowed Tesla to get Toyota’s assembly plant in Fremont, CA which is now used by Tesla to make the Model S, among other models.

Tesla’s CEO Elon Musk hinted that there are still deals in the works between the two companies, but their relationship may now be dead in the water, all things considered.  It seems such a shame considering the several technical issues that Tesla has been able to solve, including cold starts during winter.

The only question remains, which bet will pay off in the future – that of a big old company or that of a young nimble start-up.  With hydrogen fuel cell technology still in the laboratories and battery electric vehicles already on the streets, the answer may come faster than expected.

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