Tesla acquires NUMMI plant, partners with Toyota

State Governors aren’t usually the source of breaking automobile news, but California Governor Arnold Schwarzenegger just let a major cat out of the bag.

State Governors aren't usually the source of breaking automobile news, but California Governor Arnold Schwarzenegger just let a major cat out of the bag. In a speech made earlier on Thursday, Schwarzenegger announced that Toyota is partnering with Californi's Tesla Motors to produce the company's Model S sedan - to be assembled at the former Toyota-General Motors NUMMI joint venture assembly plant.

Tesla has apparently canned plans to build its Model S in Downey, California, which has irked local officials.

"We're shocked, appalled and disgusted," said Downey Councilman Mario Guerra in an interview with the San Jose Mercury News. "We have been dealing in good faith with Tesla and feel stabbed in the back."

Tesla CEO Elon Musk told Downey officials of the plan just hours before Schwarzenegger made his announcement this evening in Fremont.

Governator, California help make it happen
One condition that helped to make the California location a viable option to both Tesla and Toyota was the addition of special incentives from the state. Governor Schwarzenegger helped to pass a special abatement of sales tax on capital equipment purchases, which will have a variable benefit for Tesla based on the amount of purchases it makes. Tesla CEO, Elon Musk, said that the abatement might equate to roughly $20 million in savings over the next few years.

Plant gets new life
Tesla purchased the NUMMI facility for an undisclosed amount and the company says it will look to hire about 1,000 workers shot-term to assemble the Model S. On a long-term basis Tesla projects approximately 5,000 jobs will be created at Tesla, and another 5,000 jobs for its suppliers.

Curiously, NUMMI will continue to control the parking lot and an adjacent parcel, although it won't have any say in the plant, as Tesla only purchased parcel number two of three.

Previously, the NUMMI plant was operated as a joint venture between Toyota and GM until the Detroit automaker abruptly pulled out its stake last year. The last Toyota to be built at the plant, a Corolla, rolled off the line last month.

Musk, Toyoda work out deal
Musk and Toyota chief Akio Toyoda said that they worked together on the deal, which will see a $50 million investment in Tesla from the Japanese automaker, according to Schwarzenegger.

"We look forward to learning and benefiting from Toyota's legendary engineering, manufacturing, and production expertise," Musk told the Los Angeles Times.

It's unclear exactly what Toyota will get out of the deal - although a Toyota-badged version of the Model S seems possible. Musk did suggest that joint projects will commence before the mid-2012 expected start of production of the Model S.

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