Tesla plans Japan push

TOKYO—The head of electric sports-car maker Tesla Motors Inc. said Friday that he expects Japan to become the company's largest market outside the U.S.

Tesla Chief Executive Elon Musk also predicted the luxury auto maker's U.S.-dominated client base will expand steadily overseas so that its sales are split evenly among the U.S., Europe and Asia.

"We do believe Japan will be our No. 2 country in terms of sales over time," Mr. Musk said, speaking at a joint news conference with the CEO of Toyota Motor Corp. "Japan is a key market for the kind of product we produce," he added.

California-based Tesla opened its first showroom in Asia last month in Tokyo's swanky Aoyama district, which comes in addition to six dealerships in Europe, including its newest outlet in Paris that was opened earlier this year.

The company has sold fewer than 1,500 of its $100,000-plus Roadsters, which made their debut earlier this year. It plans to introduce a midsize sports sedan from 2012.

Tesla has strong ties to Japan as two of its major shareholders are corporate titans Toyota and Panasonic Corp.

Earlier this year, Toyota invested $50 million in Tesla, with which it will develop an electric sport-utility vehicle. Panasonic, which provides battery cells to Tesla, injected the company with $30 million on Nov. 6.

Under Tesla's partnership with Toyota, the two companies will collaborate on an electric version of Toyota's RAV4 model using Tesla's battery technology. Limited production of the small sport-utility vehicle will begin at a former Toyota-owned factory in Freemont, Calif., with commercial sales starting in 2012, but there are no current plans for mass production.

One reason may be that Toyota plans to sell its own, independently developed electric vehicle in the U.S. from 2012. Toyota President Akio Toyoda said this ultra-minicar, which is being developed independent of Tesla and is based on its British and Japanese market iQ model, also might be sold in Japan.

"In Japan, I think customers are probably saying they would use electric vehicles to commute short distances, so we are considering the iQ-based EV," Mr. Toyoda said.

Messrs. Musk and Toyoda spoke to reporters after a ceremony at a dealership of Toyota's luxury Lexus-brand vehicles, just across from Tesla's new Tokyo showroom where a limited-edition Tesla Roadster with a custom "twilight red" paint job was presented to Mr. Toyoda.

The car is a right-hand drive twin of Mr. Musk's own left-hand drive Roadster, which Mr. Toyoda drove during a recent visit to Palo Alto.