Toyota to start building electric RAV4 in Ontario

Updated: Toyota plans to make its first electric RAV4s in conjunction with Silicon Valley electric car company Tesla (s TSLA) Motors in Woodstock, Ontario, according to a report in the Toronto Star (hat tip Tyler Hamilton’s blog Clean Break). The report says that the companies will start assembling the first RAV4 EVs in the coming months in a factory in Woodstock and that the Canadian governments are contributing $141 million to Toyota in part to upgrade the Woodstock facility. Update: Here’s the official confirmation.

Tesla produced a prototype RAV4 EV for Toyota several months ago (see video below), and then also scored a $100 million supply deal to actually build Toyota’s upcoming RAV4 EV. The supply arrangement calls for Tesla to provide an electric powertrain system for the car, which includes a battery, a charging system, an inverter, a motor, a gearbox and software. The car companies say in a filing that manufacturing of the RAV4 EV is expected to start in 2012 and continue into 2014 and $100 million is the estimated value of the entire manufacturing deal over that period of time.

In addition this week Tesla CEO Elon Musk hinted in the company’s second quarter earnings call that there could be an “order of magnitude larger deal” with Toyota in the works. Though, Musk declined to elaborate on more details of that potential deal.

There has been some expectation that Tesla would build the RAV4 EV in California (or maybe I just assumed it), but as Hamilton points out in his blog post, Toyota has been building the original RAV4 in Ontario. And the Ontario government has had a vision to turn the area into a hub for electric vehicle manufacturing, complete with aggressive EV subsidies.