Tesla Motors has entered into a Phase 1 Contract Services Agreement with Toyota Motor Corporation (TMC) for the development of a validated powertrain system, including battery, power electronics module, motor, gearbox and associated software, which will be integrated into an electric vehicle version of the RAV4.

Based on preliminary specifications, TMC will pay Tesla approximately US$60m for the development services to be provided by Tesla.

Both parties will mutually agree to the final specifications, deliverables and payment amounts and schedule within 60 days of the execution of the agreement. This amount will be paid in various instalments during the term of the deal.

Tesla and TMC previously entered into an agreement to initiate the development of an electric powertrain system for the RAV4 in July 2010.

TMC purchased $50m of Tesla's common stock in a private placement transaction that closed immediately subsequent to the closing of Tesla's initial public offering in July 2010.