Tomahawk, WI 05/16/2014 (Basicsmedia) – Is Tesla Motors now ready to stand on its own feet after the much needed kick-start impetus from Toyota?

Toyota Motor Corp (ADR) (NYSE:TM) has decided not to renew their 3 year contract with Tesla Motors Inc (NASDAQ:TSLA). In 2010, their relationship began on a healthy note when Toyota infused $50 million and gained a 3% stake in this newly formed carmaker from California. For Tesla Motors, this was not merely capital infusion but a thrust of credibility too.This news could not have come at a better time when Tesla Motor’scelebrated model S Sedan was gaining acceptance among people. Soon after, they entered into ajoint development dealof 3 years where Toyota would pay $100 million to Tesla Motors for supplying electric powertrain components for Toyota’s RAV4 SUV.

Reasons for not renewing the contract

As per everyone’s expectation, the RAV4 SUV model from auto giant Toyota could not do well in the market.Although, Toyota Motor Corp (ADR) (NYSE:TM) tried various offers and low-cost lease options, customers showed their aversion.

Toyota President Akio Toyoda had said that, “When customers do give us the answer, I want the company to be ready”. So, after dismal acceptance from customers, company is changing its focus from all electric cars to Fuel cell Technology.

Although the contract comes to an end, Toyota confirmed that it will retain its 3% stake in Tesla Motors.

The road ahead for Tesla Motors

On the other hand, Tesla Motors Inc (NASDAQ:TSLA) is trying to strengthen its other strategic alliances with companies like Panasonic and Daimler. It has recently started supplying electric powertrain components and battery packs to B-class electric vehicles of luxury carmaker Mercedes-Benz. There seems nothing to worry about Tesla Motors as sales for its model S Sedan is also growing. Besides, if everything goes well, next year we may see the launch of Tesla’s Model X- A crossover electric vehicle deemed to be faster than Porsche 911 Sports Car.

Only time can say how investors will react to the end of the contract. Let’s hope the end of the deal brings luck to both the companies. 

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