Toyota and Tesla have announced that they will partner each other in the production of electric cars. EV specialist Tesla will acquire Toyota’s New United Motor Manufacturing Inc (NUMMI) plant that was recently closed down. NUMMI, located across the San Francisco bay from Tesla’s Palo Alto HQ, was a former joint venture between Toyota and General Motors.

Tesla will be looking to employ around 1,000 more staff. CEO Elon Musk said that Tesla’s next model, a sleek four-door coupe style called Model S, will account for about 20,000 units a year when it debuts in 2012. The $40,000 Model S will be affordable for the brand’s standards, joining the over $100,000 Roadster.

Toyota will be investing $50 million in Tesla in exchange for common stock after the latter’s initial public offering is completed. What does the world’s biggest automaker stand to gain here? Tesla’s lean and rapid product development is one, as well as its electric vehicle technology. Toyota is still using nickel-metal-hydride batteries in its hybrids for instance, while Tesla is using lithium-ion. In return, Tesla will gain from Toyota’s scale, engineering resources and access to its massive supplier base.

“Decades ago, Toyota was also born as a venture business. By partnering with Tesla, my hope is that all Toyota employees will recall that venture business spirit and take on the challenges of the future,” Toyota president Akio Toyoda said about the partnership.

See and read more of the Tesla Model S here.