Tesla formalizes Toyota deal for two cars

Electric carmaker Tesla Motors has signed a memorandum of understanding with Japanese automaker Toyota Motor to deliver two electric vehicles to the world's largest automaker by the end of month.

"Since our announcement in May, Toyota and Tesla engineering teams have made a lot of progress in a short amount of time and it is exciting to start seeing some initial results," Tesla Chief Technology Officer JB Straubel said Friday in a statement. "The prototypes will combine Toyota vehicles with Tesla electric powertrains."

Tesla had announced the partnership to develop electric vehicles with Toyota in May, but revealed in a regulatory filing that it had no formal deal in place.

The memorandum of understanding was signed Thursday, a Tesla spokesman said, but declined to reveal which Toyota vehicles the company was working on. Earlier on Friday, Toyota President Akio Toyoda told reporters in Japan that Toyota was interested in experimenting with Tesla's approach to using lithium-ion battery cells developed for the electronics industry as a potential alternative to developing batteries tailor-made for its own vehicles.

"We'll see which better meets the needs of consumers. We're taking a multi-faceted approach," Toyoda told a group of U.S. reporters invited to tour Toyota's facilities.

Engineering teams from the two automakers have been meeting and working on the prototypes, Tesla said.

The comments represent the most detail the two companies have provided about the scope of a still-developing partnership with Tesla announced in May by Toyoda and Tesla Chief Executive Elon Musk.

Toyota invested $50 million in Tesla in a private placement after the electric vehicle maker's initial public offering in June. Toyota's tie-up with Tesla is seen as a strong endorsement of the seven-year-old start-up.