Toyota wants to keep r&d ties with Tesla, N.A. engineering chief says

Nagata: "Tesla has quite a clear business strategy for developing a better battery."

DETROIT -- Toyota Motor Corp. hopes to continue working with Tesla Motors Inc. on battery technology even after a battery-supply agreement between the two companies ends this year, Toyota’s head of North American engineering and manufacturing said Thursday.

"Tesla has quite a clear business strategy for developing a better battery," said Osamu Nagata, president and CEO of Toyota Motor Engineering & Manufacturing North America. "[Automakers] as well as suppliers need to work on developing better batteries."

He made the comments to journalists before he was scheduled to receive an annual leadership award on Thursday from the Society of Automotive Engineers Foundation.

Toyota said this month that it will phase out an agreement unveiled in 2012 for Tesla to deliver 2,600 battery packs for Toyota’s electric RAV4 over three years.

Toyota, the world’s largest seller of gasoline-electric hybrid vehicles, owns a 2.5-percent stake in EV-maker Tesla.

Nagata also spoke about the future of fuel-cell vehicles, which Toyota has recently signaled will become a top priority for the company in coming years.

"I hope we can show the very strong capabilities of fuel cell vehicles so we can convince more and more people of the potential and possibilities of the fuel cell vehicle," he said.

Nagata could not say whether fuel-cell technology is better than EV technology, but proudly showed off a picture of Toyota’s FCV fuel cell vehicle that serves as the background on his cell phone.

Toyota is shifting from building longer-range, battery-electric vehicles in favor of hydrogen fuel cell vehicles, the company’s top North American executive said this week.

Jim Lentz, CEO of Toyota’s North American region, said Toyota sees battery-electric vehicles as viable only in select circumstances such as shorter distances -- from the office to the train, or home to the train -- as well as for use on large corporate campuses.

Lentz said Toyota believes there are better alternatives, such as hybrids and plug-in hybrids, and eventually, fuel cells, for long-range travel needs.

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