Toyota has announced that they would be moving away from Tesla’s battery technology, which they were originally one of the first supporters in Tesla’s battery technology and took a 3% share (worth about $690 million) of the company in addition to adopting their battery technology. Keep in mind that currently, Tesla manufactures battery technology for Toyota and Mercedes and is in the process of building a $5 billion gigafab in order to increase their battery capacity. So, while Tesla is looking to expand their battery manufacturing capacity, one of their closest partners is moving away from Tesla’s tech.

Toyota is claiming that they are moving towards a new alternative energy standard which has long been considered to be less feasible than electric power, hydrogen fuel cell. Companies like Honda and Toyota have been toying with hydrogen fuel cell and electric car technology for the past few decades with a few prototypes here and there, but ultimately little to no commercial traction. However, it seems like Toyota isn’t particularly interested in the current model with electric cars where new charging stations need to be installed at users’ homes, work and places that they go. Toyota appears to be more interested in the ‘gas station’ model where people would simply refuel with hydrogen rather than waiting for a charge. So, Toyota recently created the FCV Concept which was announced at CES and ultimately showed where Toyota had been looking to move for 2014 and beyond.

Toyota FCV Concept

Toyota FCV Concept

While I don’t think anyone can definitively say whether or not Toyota’s decision to move away from Tesla’s battery technology is necessarily a good one, Toyota is still the #1 seller of hybrid and plug-in hybrid vehicles and that’s still a whole lot of batteries that need installing. I personally understand why someone would look at electric cars as not-so-green technology considering the amount of energy necessary to create those batteries and the source of a lot of the power that charges them. However, I believe that we may ultimately see a combination of hydrogen fuel cell technologies alongside electric car technologies much like we have diesel and gasoline engines which ultimately are both combustion engines but they accomplish combustion via different types of fuel.

Hopefully this isn’t too much of a blow for Tesla, with Toyota moving away from their battery tech. Perhaps once Tesla launches a more affordable electric car and the Model X they will be able to spur enough battery demand on their own so that companies like Toyota aren’t as critical to them anymore.