TOKYO -- Earlier this fall, a video crew roamed the halls at Tesla Motors Inc. interviewing executives and documenting how the electric car startup does business.
Don't look for the production on the Discovery Channel. It's for internal use only -- at Toyota.
At President Akio Toyoda's bequest, the video will be shown to his Japanese employees in a bid to motivate them to rekindle the entrepreneurial spirit he says they lost long ago.
“A lot of these people at Tesla are only in their 20s or 30s and have so much responsibility,” said one Toyota official familiar with the project. “It's totally different from us.”
The motivational video is just one outgrowth of the May tie-up that saw Toyota Motor Corp. investing $50 million in the California-based electric car manufacturer. But it highlights how Toyoda hopes the world's biggest carmaker can learn from one its smallest, as the ossified giant struggles to lift profits, differentiate its product and recover from its worst ever quality crisis.
“The speedy decision-making that's part of its makeup is what we want to absorb,” Toyoda said of Tesla at a recent press event. “Toyota began as a venture. We want to renew this DNA.”
Toyoda cited Tesla's six-month turnaround in creating an all-electric version of its RAV4 small SUV as an example of Tesla's nimble business dynamics. The concept is scheduled to debut this week at the Los Angeles auto show and will go on sale in 2012.
The contrasts of the two companies could hardly be starker. Tesla CEO Elon Musk is 39; Akio Toyoda is 54. Tesla employs about 900 people, Toyota some 321,000.Tesla is swimming in red ink; Toyota is consistently one of the industry's most profitable companies.
Tesla has sold 1,300 cars -- total. Toyota sells 7.4 million a year.
But Tesla's streamlined bureaucracy and willingness to take risk have captured the imagination of Toyoda, who is trying to breathe new life into a company that has recalled more than 15 million vehicles in the past year and is losing market share in the United States.
Instilling a sense of personal initiative and localized decision making is key to his overhaul. Hence the video showcasing positions of authority given Tesla's young whiz kids -- something foreign to Toyota, where seniority and experience often count as much as or more than talent.
Toyota also is intrigued by Tesla's electric drivetrain and battery system -- and aims to glean some insights into that technology. Executive Vice President Takeshi Uchiyamada says Tesla's use of smaller, less expensive batteries could be a breakthrough -- if they are reliable.
Toyota has been investing heavily in its own battery joint venture with Panasonic Corp., Primearth EV Energy Co., to develop lithium ion cells tailored for automobiles and the high-tech factories to produce them. Tesla also uses a specialized cell, but one that can be made on existing battery lines and packaged like common laptop computer batteries.
The RAV4 project is Toyota's way of testing Tesla's technology -- and co-opting it, if it passes.
Image is everything
Toyota is looking for something else from Tesla: a little cachet.
Toyoda, a self-described car nut, loves to hobnob with the CEOs of other sporty brands, people such as Musk, Lotus CEO Dany Bahar and Aston Martin's Ulrich Bez. Toyoda may hope that some of their luster helps spiff the image of his more pedestrian lineup of Camrys and Corollas.
The basking works both ways. Through the partnership, Tesla reaped Toyota's $50 million initial investment and another $60 million to develop the electric RAV4.
But the money-losing upstart also won something more valuable: legitimacy.
At a recent press event in Tokyo, Musk presented Toyoda a metallic red roadster to commemorate their partnership. The scene was mobbed by the media -- who were there as much to see Akio as they were to see the previously all but unknown American businessman.
Tesla has other reasons for keeping Toyota close. Having taken over the California assembly plant once jointly operated by Toyota and General Motors, Tesla has more factory than it knows what to do with. Learning Toyota's production and quality techniques is a top priority.
“We don't yet have understanding and expertise when it comes to mass production, or even limited mass production,” Musk said. “There is so much to learn; I don't know quite where to start.”