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Tesla's Model S

The Tesla Roadster
Uncle Sam stands a better chance of getting its money back from Tesla than from GM or Chrysler

Tesla Motors has received approval from the United States Department of Energy for up to $465 million in low-interest loans. The electric car manufacturer had faced significant financing difficulties due to the global credit crunch and resulting recession, despite having an order backlog of over 1,500 vehicles. This forced a delay in the acquisition of a Californian production facility and the subsequent plans for several models.

The loans are part of the Advanced Technology Vehicle Manufacturing Program, which provides incentives to new and established automakers to build more fuel-efficient vehicles, including hybrid and electric vehicles. The ATVMP was created in 2007 and appropriated funding in September 2008. The $25 billion program is supposed to reduce America’s dangerous dependence on foreign oil and create “green collar” jobs.

The program is not related to any economic stimulus package or bailout funding that General Motors and Chrysler have received.

“Tesla will use the ATVM loan precisely the way that Congress intended -- as the capital needed to build sustainable transport,” said Tesla CEO and Product Architect Elon Musk. “We are honored that the US government selected Tesla to be among the first companies to participate in this progressive program.”

Tesla Motors plans to draw $365 million for production engineering and assembly of the Model S, an all-electric family sports sedan that carries up to seven people and travels up to 300 miles per charge. The company expects to start production of the Model S in late 2011 in a new assembly plant employing approximately 1,000 workers.

Tesla will use the remaining $100 million for a powertrain manufacturing plant that will supply all-electric powertrain solutions to other automakers, greatly accelerating the availability of mass market electric vehicles.  The new factory is expected to employ about 650 people in California. Tesla is currently in the final stages of negotiation for both facilities.

The firm recently signed a deal with Daimler, which will provide engineering and financial support in exchange for a ten percent equity stake. Daimler will use Tesla's powertrains in its second generation electric Smart cars starting in 2012.

Tesla remains privately owned, with several hundred million dollars in funding coming from Elon Musk (former President of Paypal) and several venture capital funds. Google co-founders Sergey Brin & Larry Page are significant investors, as is former eBay President Jeff Skoll.

The company plans to reach a breakeven point by the end of this year, as it increases sales by opening half a dozen new stores throughout North America and Europe. Its new London store will open on June 25.

If all goes well with production and sales of Model S vehicles, Tesla intends to produce an affordable third model, codenamed BlueStar. This electric vehicle for the masses is targeted to cost around $30,000, with development being  funded by profits from the Model S sedan.


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RE: It's Good to be in DC
By TSS on 6/23/2009 7:08:33 PM , Rating: 2
actually i started jumping back through DT articles to come up with a "flawed business model" idea. after all, if their business model works, why are they having a hard time financing?

http://www.dailytech.com/Tesla+Motors+Begins+Produ...

"The company is slowly churning out Roadsters and hopes to build as many as 100 units per month by early 2009."

lofty goals.

http://www.dailytech.com/Tesla+Motors+Begins+Roads...

"Tesla currently has a backlog of over a thousand orders at a base price of $109,000 US dollars. Production is ten roadsters per week, although the company plans to increase its rate."

a year after production started, their production is 40% of their estimates. their backlog has nigh doubled. and this is with a 109,000 dollar car.

if im an investor and tesla right now would ask me for a huge pile of cash for the next car, which'll be half as expensive so sold twice as much (mjeh, you know what i mean), i wouldn't take the risk. if they'd be able to show me to actually sufficiently produce this model against demand, well, i'd finance them right away, sounds like a gold mine to me. but the proof, their current car, speaks to the contrary.

yes this facility will be for beeing able to produce that model but if their estimates for their current car where wrong (both demand or supply wise), why won't their next estimates be wrong?

http://www.dailytech.com/Teslas+Plans+for+San+Jose...

not to mention here it's: "Tesla says it is seeking $250 million USD to build its Model S facility and $150 million USD for an advanced powertrain facility." which now has become, $365 million and $100 million. that doesn't make sense at all.

good thing the government doesn't care about anything like that. so i'd still say this is a bailout, no matter what the funds is named of which the money comes. because you and i both know, if tesla didn't get this money and had to return to the financial markets they'd never get it (because you don't turn to the government if you can).


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