Tesla notifies SEC of Agreement with Toyota to Develop Electric Version of RAV4

On October 6, 2010, Tesla Motors, Inc. (“Tesla”) entered into a Phase 1 Contract Services Agreement (the “Agreement”) with Toyota Motor Corporation (“TMC”) for the development of a validated powertrain system, including a battery, power electronics module, motor, gearbox and associated software, which will be integrated into an electric vehicle version of the RAV4.

Pursuant to the Agreement, based on preliminary specifications, TMC will pay Tesla approximately $60 million for the development services to be provided by Tesla.

The parties will mutually agree to the final specifications, deliverables and payment amounts and schedule within 60 days of the execution of the Agreement. This amount will be paid in various installments during the term of the Agreement.

Tesla and TMC previously entered into an agreement to initiate the development of an electric powertrain system for the RAV4 in July 2010 and TMC purchased $50.0 million of Tesla’s common stock in a private placement transaction that closed immediately subsequent to the closing of Tesla’s initial public offering in July 2010.

Tesla’s goal is to produce increasingly affordable electric cars with lithium ion batteries to mainstream buyers – relentlessly driving down the cost of Electric Vehicless.

Palo Alto, Calif.-based Tesla has delivered more than 1000 Roadsters to customers in North America, Europe and Asia. Tesla designs and manufactures Electric Vehicles with lithium ion batteries and EV powertrain components.

It is currently the only automaker in the U.S. that builds and sells highway-capable Electric Vehicles in serial production. The Tesla Roadster accelerates faster than most sports cars yet produces no emissions.

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