By on October 31, 2008

Oh noes! According to an unnamed source referred to by Valleywag as “the Tesla insider,” the Silicon Valley electric car maker only has $9m in the bank. And that’s it. Well OK– there’s a bit more. This “insider” (Gawker just loves insiders) is a friend of blogger Owen Thomas and a “longtime employee” (define “longtime” for Tesla.) Problem? They’ve taken “multiple tens of millions” from depositors. And (apparently) spent it. And the “insider” is saying Tesla may just keep the remaining cash and not deliver any more Roadsters. I’ve been standing on the sidelines of this particular Death Watch series (strangely and flatteringly, Valleywag tagged their story “Deathwatch”) because a dear friend of mine works at Tesla. Did I say “works?” I meant worked, as in he got “broomed” the other week when Tesla made with the massive layoffs. Bad move on my part, as it looks like Tesla and friendship just don’t mix. Don’t trust me? Trust the insider, “I actually talked a close friend of mine into putting down $60k for a Tesla Roadster. I cannot conscientiously be a bystander anymore and allow my company to deceive the public and defraud our dear customers. Our customers and the general public are the reason Tesla is so loved. The fact that they are being lied to is just wrong.” Oops! And agreed. Lying is wrong.

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13 Comments on “Tesla Death Watch 32: Cash Conflagration Kills Cars?...”


  • avatar
    Richard Chen

    In the comments section:

    Mel 11:57 PM on Thu Oct 30 2008

    Let’s see.

    They’re developing a revolutionary car – check.

    They’ve taken lots of money for pre-orders – check.

    They’ve delivered less than 50 cars – check.

    They’re rapidly running out of money – check.

    Wow. It’s the Electric Tucker.

    The Tucker also went through a couple of transmission designs. Hmmmm.

  • avatar
    SwatLax

    Update: They have raised an additional $20M in private financing, and Musk is personally backing all investments with his personal fortune.

    Sounds good, but I hope the investors got that in writing.

    http://www.reuters.com/article/marketsNews/idUSN3130815920081031

  • avatar
    dkulmacz

    A recent comment in another thread caught my eye . . . if I might paraphrase, it essentially said “let the existing domestic automakers die, but support a new crop of domestic companies that will surely sprout in the gap they leave”.

    If any company had the credentials to be one of these ‘new breed’ of US auto companies, it seems that Tesla should have been it. First mover advantage on a new technology; home base in the heart of the US’ high-tech homeland and darn close to a major source of fashion and cultural trends; plenty of cash from willing investors; a darling with the media and every stripe of celebrity in Hollywood. And I’m sure the list goes on.

    Yet here they are. Misleading public statements on vaporware products. Backpedaled performance claims. Delayed milestones. Disappointed (or plain ripped-off) customers. Massive layoffs. Empty bank accounts. Again . . . the list goes on.

    With your eyes shut and perhaps a few tweaks, it smells just like a story about the Big 3.

    So tell me . . . if this seemingly golden company can’t succeed here — and in fact seems to fall into exactly the same traps as our existing domestic producers — is there something inherent in our market that stacks the deck against domestic players?

    At some point, it becomes a bit of a stretch to always invoke ‘bad management’ as the reason. As I’ve seen mentioned elsewhere on the site, it strains credibility to believe that every top manager at every domestic automaker for the past half century has been crappy at his job. So is it necessary to call on that chestnut again as the reason for Tesla’s implosion?

    I’d love to see the editors or the {ironic finger quotes} “best and brightest” {/ironic finger quotes} do some deep thinking and provide some commentary beyond the usual glib and easy answer . . .

  • avatar

    Mmm… SwatLax, Tesla “expects” to raise another $20 million. As in, “My expectation is next week is likely.”

    A Tucker sold for just shy of $1 million in August. How long until the Tesla gets there?

  • avatar
    factotum

    Oh, noes! Time Magazine just named Tesla one of their top 50 (#2) inventions of 2008. Time sure has gone downhill…

  • avatar
    doug

    Well, no matter what you say, the car is still pretty phenomenal. Hopefully all the financial issues get worked out.

    Motor Trend test drive.

  • avatar

    As I’ve seen mentioned elsewhere on the site, it strains credibility to believe that every top manager at every domestic automaker for the past half century has been crappy at his job.

    it’s not that every manager is crappy at their job. It’s that the 3 are sclerotic (especially GM) due to turf wars, etc., and the corporate culture is not conducive to quality. There are probably some competent individual managers in GM.

  • avatar
    volvo

    In other news it was reported that vouchers for 76 trombones were found at the now deserted Tesla headquarters.

  • avatar
    cos999

    For those TTAC’ers interested in a simular situation playing out in Aerospace, go Wiki Eclipse Aviation and for the insider details go read the blog here.
    http://www.eclipsecriticng.blogspot.com/
    After burning through $1 Billion, the original CEO was replaced this summer, no new planes are being built and they are just about out of money. Original offering price $2 million. Subcontractor making the tails of the plane closed up shop in August, customer lawsuits trying to get their deposits back have commenced.

    This is where TESLA is heading….

    One difference is Eclipse has delivered 255 planes, but those planes are having a myriad of problems as cited in the blog.

  • avatar
    HarveyBirdman

    volvo,

    Best comment of the day. Of course, Elon Musk is our Professor Harold Hill in this case. Then again, if Tesla Motors was headquartered in Iowa instead of Silicon Valley, perhaps Musk would have been run out of town before the company even got off the ground…

    And cos999, I think you’re absolutely right about the parallels to Eclipse. I just moved to Albuquerque and it ain’t a pretty situation for Eclipse, not to mention the area’s stake in the company’s success.

  • avatar
    guyincognito

    “I’ve gone on record as saying that I am personally standing behind delivering the cars and the deposits for the company,” Musk told Reuters late on Thursday.

    “I have the means and wherewithal to do so. So people should have absolutely zero concern about their deposit.”

    I look forward to Musk setting this benchmark for wealthy business owners.

  • avatar

    Richard Chen: Except Tucker was a serious threat to Detroit, and they (as the story goes) made every effort to sabotage them.

    From Wikipedia:

    “During the trouble Tucker faced while trying to promote his car and get it into production, he claimed that the “Big Three” automakers were deliberately attempting to sabotage his efforts, through the influence of Detroit Senator Homer Ferguson, who is commonly held responsible for initiating the SEC’s pursuing of Tucker’s business.”

  • avatar
    waguy

    Now it’s 2012.

    I live 50 miles outside Perth, Western Australia, being the most remote city on Earth.

    I can buy a Tesla sedan with a 480 km / 300 mile range from the Australian dealership at the same price as a European (petrol) sedan.

    So .. what’s this “thetruthaboutcars” you speak of ?


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