Journalists crowd around the prototype Tesla Model S all-electric 5-door sedan after its unveiling in Hawthorne, Calif.
An official who negotiated with Tesla Motors Inc. to open an auto factory in Southern California said Thursday that the carmaker will instead partner with Toyota Motors Corp. to build electric cars at a recently shuttered auto plant in the San Francisco Bay area.
Downey Councilman Mario Guerra said Tesla CEO Elon Musk called him to break the news, hours before Tesla planned a news conference with Gov. Arnold Schwarzenegger in Palo Alto.
"We feel stunned. Just recently we met with Elon Musk and his top executives to go over page by page of a lease agreement," Guerra said. "We were led to believe that Downey was it, I can't tell you how many times we've been told this."
A call to Tesla spokeswoman Khobi Brooklyn was not immediately returned.
Earlier, she declined to discuss what will be announced at the news conference. But Schwarzenegger said Thursday morning at an unrelated event in Mountain View that Tesla and Toyota will work together, the governor's spokeswoman Andrea McCarthy said.
A Toyota spokesman declined to comment.
Guerra said the Downey City Council was about to vote on deal allowing Tesla to rent 20 acres of city property that used to be a NASA manufacturing plant.
He said Musk was apologetic and told him the deal to build electric cars at the New United Motor Manufacturing Inc., known as Nummi, in Fremont came together in the last several days.
Tesla had been scouting for a site to build its forthcoming Model S electric sedan, which is scheduled to go on sale in 2012. The Model S is slated to sell for $49,900, including federal tax credits, and is designed to travel as far as 300 miles on a three- to five-hour charge.
Tesla makes only the $109,000 Roadster, a two-seater electric sports car that is partially built in California and England. The Roadster can travel 236 miles on a three-and-a-half hour charge.
The Nummi plant, established in 1984 as a joint venture between GM and Toyota, employed 4,700 workers. GM made the Pontiac Vibe there but withdrew from the alliance last year after filing for bankruptcy protection.
Toyota made the Corolla sedan and Tacoma pickup at the plant but said in August that without GM, it could not sustain the factory. The last of nearly 8 million vehicles that moved through the sprawling facility rolled off the lot last month.
The fate of the plant had been unclear. At its closure, plant executives said some employees would stay on while they try to sell off equipment and clean up. Executives also said the plant would try to find a buyer and work with city and state officials to identify the best new use for the site.