The actor turned governor made the surprise announcement at Google's Mountain View headquarters but he failed to specify where in California the car will be made.
The news caught the Palo Alto-based company off guard, who declined to confirm the news but the company has scheduled a press conference at 5 p.m. to make an announcement.
Tesla is holding a $465 million loan guarantee from the Department of Energy to produce all electric cars. For its part, Toyota is already the maker of the most popular hybrid in the country and it has previously said it plans to release an all-electric vehicle -- similar to the Nissan Leaf and the Chevy Volt -- by 2012.
Toyota previously made its Corrolla and Tundra trucks in Fremont, Calif. before pulling out of the NUMMI plant in April.