Toyota is to buy $50m (£35m) of Tesla stock as part of a deal between the two firms to co-operate on the future development of electric cars and engineering.
The two companies are aiming to set up specialised engineering teams to concentrate on the joint efforts. As part of the arrangement, Toyota will bolster Tesla’s finances by buying £35m of stock, and Tesla will take on Toyota’s recently closed factory in Fremont California, formerly home to the Corolla and Tacoma.
The plant is capable of producing half a million vehicles per year; Tesla will use it to produce its Model S saloon.
"I sensed the great potential of Tesla's technology and was impressed by its dedication to monozukuri [Toyota’s approach to manufacturing]," said TMC President Akio Toyoda. "Through this partnership, by working together with a venture business such as Tesla, Toyota would like to learn from the challenging spirit, quick decision-making, and flexibility that Tesla has.
"Decades ago, Toyota was also born as a venture business. By partnering with Tesla, my hope is that all Toyota employees will recall that 'venture business spirit,' and take on the challenges of the future."
Tesla CEO and co-founder Elon Musk added: "Toyota is a company founded on innovation, quality, and commitment to sustainable mobility. It is an honor and a powerful endorsement of our technology that Toyota would choose to invest in and partner with Tesla.
"We look forward to learning and benefiting from Toyota's legendary engineering, manufacturing, and production expertise."