Alan Salzman, CEO of Vantage Point Venture Partners, is bullish on the future of electric cars.

He thinks there will be a tipping point in the use of electric over combustion engines within the coming decade. “And then it will go very rapidly,” the venture capitalist said in an interview with Portfolio.com earlier this year. “Electric cars are an inevitability because the electric motor is inherently more efficient and more effective than the combustion engine.”

Looks like one of the companies Salzman’s firm has invested in, Silicon Valley startup Tesla Motors, is out to prove just that by joining its small, boutique operation to the power of the world’s largest automaker.

California Governor Arnold Schwarzenegger announced Thursday morning that Tesla—the maker of an electric roadster that happens to be one of the world’s speediest cars—will team with Toyota to make electric vehicles. It’s a deal that would combine the know-how of Tesla in the electric-car arena with the scale and engineering prowess of Toyota, and Toyota’s own expertise as the maker of the world’s most popular hybrid, the Prius.

Tesla makes its cars by hand, essentially, and the price of them is correspondingly high—$130,000—and you have to be prepared to wait to get one.

Speaking Thursday morning at Google Inc. headquarters to announce the launch of the Green Products Innovation Institute, Schwarzenegger said California needs to focus more than ever on the green economy because “technology and innovation will save us all.”

He went on to say he was spending the afternoon in the San Francisco Bay Area at Tesla’s offices, and that the company would announce Thursday it is entering into a joint venture with Toyota Motors to develop an all-electric vehicle that would be manufactured in California.

Tesla, which currently only makes its high-end roadster, has had plans to make a sedan, the Model S. But Tesla CEO Elon Musk said the two companies will also develop cars together.

Schwarzenegger said at an afternoon press conference at Tesla headquarters that Toyota will invest $50 million in Tesla and the partnership would create 1,000 jobs. The California carmaker will manufacture the new Model S sedans at the New United Motor Manufacturing Inc. (NUMMI) plant in Fremont, California. Toyota shuttered the plant, which had made Corolla cars and Tundra pickup trucks, earlier this year. NUMMI was the last operating auto assembly plant on the West Coast before it was shut down.

But now it will be reborn, and will be the site not only of the Model S manufacturing, but possibly new cars yet to be developed jointly by Toyota and Tesla.

“I’ve felt an infinite possibility about Tesla’s technology and its dedication to monozukuri (Toyota’s approach to manufacturing),” said TMC president Akio Toyoda, in a statement. “Through this partnership, by working together with a venture business such as Tesla, Toyota would like to learn from the challenging spirit, quick decisionmaking, and flexibility that Tesla has. 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.”

In its release, Tesla said it was aiming to make increasingly affordable electric cars, and a partnership with the world's biggest automaker could certainly help it toward that goal, said Tesla CEO Elon Musk, in a statement.

"This is one of the most exciting days in Tesla history as we are announcing this historic partnership," Musk said at the press conference, according to VentureBeat. "This consists of three major areas: Toyota is making a major investment in Tesla, we will be purchasing the NUMMI plant and making the Model S and other cars there, and, finally, we will create some electric vehicles together. It’s a great honor for Tesla to be working with Toyota, a company I have long admired."