Tesla to build electric Toyota Rav4

NEW YORK (CNNMoney.com) -- Tesla Motors will produce electric Rav4 crossover SUVs for Toyota Motor Co. beginning in 2012, the two companies announced Friday.

Toyota (TM) announced in May that it planned to invest $50 million in Tesla Motors (TSLA) upon the completion of the electric car maker's initial public offering, which took place on June 29.

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Tesla Motors will build an electric version of the Toyota Rav4 crossover in 2012.

A fleet of electric Rav4 prototypes will be delivered later this year, the two automakers said. The first prototype has already been built, the automaker said, and is undergoing evaluation.

"Tesla seeks to learn and benefit from Toyota's engineering, manufacturing, and production expertise, while Toyota aims to learn from Tesla's EV technology, daring spirit, quick decision-making, and flexibility," the automakers said in the joint announcement.

Tesla currently sells the Tesla Roadster, a two-seat electric sports car that sells for over $100,000. In 2012, Tesla plans to begin production of the Model S, an electric sedan capable of seating up to seven people. That car will be built at a Fremont, Calif., plant that had been jointly operated by Toyota and General Motors prior to GM's bankruptcy.

Toyota used an earlier version of the Rav4 as an electric vehicle in the 1990s during a time that California required automakers to sell vehicles with engines that produced zero emissions. That electric Rav4 competed against General Motors' EV1 electric car.

Some of those electric Rav4s are still in operation, including several that Toyota uses at its Newark, N.J., port facilities.

Toyota, which is already the industry leader in gas-electric hybrid cars, is also looking for other partners to develop future alternative fuel technologies. In fact, collaboration with other companies is expected to be a key part of Toyota's alternative fuel strategy, company executives have said.

Toyota executives have, in the past, expressed doubts about the market potential for purely electric cars. They cited the vehicles' high cost, relatively short driving distance, long charging times and questionable battery technology.

Last year, Toyota revealed a concept version of a tiny electric "city car" with a 40-mile range. That car was under development, Toyota said at the time, and intended primarily for short-term rental use within cities.

Toyota plans to introduce a plug-in version of the Toyota Prius hybrid car in 2011, but that vehicle would still use a gasoline engine as its primary power source.