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Report: Toyota, Tesla Continue Partnership After Battery Deal

Toyota and Tesla will end their battery-supply agreement for the RAV4 EV this year, but that doesn't mean both companies will stop working together, said a Toyota executive. Although no specific details were announced, a Toyota official said he hopes the company will still share technologies with Tesla, even if the latter will no longer build lithium-ion packs for the RAV4 EV.

Speaking with Automotive News, Toyota's North American engineering chief Osamu Nagata said, "Tesla has quite a clear business strategy for developing a better battery. [Automakers] as well as suppliers need to work on developing better batteries."

In 2012, Tesla agreed to supply Toyota with 2,600 batteries for the RAV4 EV over a three year period. At the beginning of the agreement, the companies suggested that the agreement could be the start of a bigger collaboration in the future. Sales of the RAV4 EV have been slow since the model's introduction, with only 1,594 models sold through April of this year.

This news comes in light of word earlier this week that Toyota will begin shifting its focus to fuel cell vehicles. Jim Lentz, CEO of Toyota's North American region, said that electric vehicles only allow drivers to go short distances, and that consumers need better alternatives for long-range travel. As the first step in its goal for fuel cell technology, Toyota introduced the FCV concept and has said it will bring a fuel cell car by 2015. Ironically, Tesla CEO Elon Musk has criticized the viability of fuel cell vehicles in the past, in part due to the fact that hydrogen is a volatile gas.

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