Toyota did previously agree to pay Tesla $60 million for initial technology and development for an electric Toyota SUV, but now the company has agreed to pay further funds which will see the Toyota RAV4 EV go into production.
According to reports the Tesla deal will provide components and associated technology for a production run from 2012 through until 2014 for the new RAV4 EV.
Last year Toyota bought 2.9 percent stake in Tesla, and as part of that deal, the companies also acquired an ex-Toyota/General Motors production facility in Fremont, California.
Tesla will be building the upcoming Tesla Model S electric sports sedan at the plant, as well as the motors and equipment for the upcoming Toyota RAV4 EV.
As previously reported, the Toyota RAV4 EV will not go on sale to the general public as a normal model. It will only be available on lease plans to fleets and company car sharing programs.