By on December 10, 2008

Bloomberg reports that Tesla Motors’ self-appointed CEO Elon Musk is threatening to not build its [theoretical] $57,499 four-door electric vehicle at a $250m San Jose factory if Uncle Sugar doesn’t fork-over $350m from the soon-to-be-depleted (or not) U.S. Department of Energy $25b loan program. This must please CA officials no end, as they risked the wrath of the entire Golden State business community by extending “special” tax credits galore to Tesla to “convince” the EV maker to locate production of their [theoretical] WhiteElephant sedan in The People’s Republic of California. (Hey! Didn’t New Mexico do the same thing? With the same result?) “We can’t move forward with that without a major amount of capital,” Musk told Bloomies. “If we don’t get any government funding then what we need to do is we need to wait until the capital markets recover, which could be a year or two years from now.” Or, in Tesla’s case, never. Hang on; $350m? Wasn’t that $400m the last time we looked?

“In addition to the $350 million loan application for the new sedan, Musk said Tesla is seeking $100 million to expand its drive train business in which it sells parts to other automakers and $200 million for a battery-cell production factory.”

So I make that $650m in taxpayer funds for a Silicon Valley start-up that’s sold– by its own count– 100 cars. Where do I sign?

Meanwhile, I’m glad to see that MSM has added the word “about” to Tesla’s range claims for their lithium-ion-powered trinket. “Musk today handed over the keys to Tesla’s 100th Roadster at its showroom in Menlo Park, California. The $109,000 car, which can travel about 240 miles on a single charge, was bought by Sam Perry, a Silicon Valley business consultant who was seen on television during President-elect Barack Obama’s election night acceptance speech being leaned on by talk show host Oprah Winfrey.”

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33 Comments on “Tesla Death Watch 40: Or Should That Be Suicide Watch?...”


  • avatar
    NickR

    OMG what a huckster! (To be polite about it.) That fund is going to have to stretch like rubber.

    BTW, cool looking spaceship. If you give me a slice of that fund, I promise to build that in California fer sur.

  • avatar
    lewissalem

    That’s 6.5 million per car sold so far by Tesla. Perhaps the government could just pass out F-16s instead. They’re faster.

  • avatar
    bunkie

    NickR-

    That’s the White Star from Babylon 5. And to build it, you would need the help of both the Vorlons and the Mimbari.

    With respect to the subject at hand, isn’t it time to accept the fact that it’s essentially impossible to start a car manufacturer from scratch?

  • avatar
    Bytor

    B5 fans at TTAC? When they announced the Sedan name, that pic was the first thing I thought of. (beaten to the punch)

    But I think the Fisker Karma will blow away the White Star and beat it to market.

  • avatar
    ihatetrees

    I wonder if Leslie Stahl at “60 Minutes” will do a followup interview with Musk on changes to the Tesla business plan?

  • avatar

    I’m still hoping they succeed, because I think the Roadster is great. But at this point, I wouldn’t bet on it. To be honest, I wouldn’t bet against it either. They still have a chance and in the current market/economy, this may be the best/only way to succeed.

  • avatar
    andrichrose

    Robert ,

    Much as I enjoy your site , I cannot understand
    your almost pathological hatred of all things Tesla.

    From where I am standing it does seem to be the
    only light on in the once proud american motor industry.
    Surly you should be celebrating the fact that so far they
    have shipped 100 cars ! All the road tests I have read have
    been 100% positive including some that have been posted
    by the new owners !

    So what is it then , is it the fact that that the car is
    not powered by gas , but surely thats not so bad , it has
    been proven that an electric car can indeed move alot
    faster than a gas one , 400 kph in the case of the Eliica,
    not bad when you consider that it only cost $500000
    to develop it from scratch , a figure which quite frankly
    disappears into insignifigance when you consider the
    sums that the Big 2.8 are talking about to develop new
    models .

    Back in the days of the good old EV1 the drivers
    that leased those cars , really liked them , and certainly
    did not want to give them up , indeed many people
    offered GM substantial sums of cash to keep the cars ,
    so whats the problem , I can see Tesla creating the same
    affection for its cars amongst their owners in the future,
    and at the end of the day, its american technology and
    know how that has created it .

  • avatar
    morbo

    The White Star and the Tesla Roadster, both mythical vehicles which cannoot be built except with advanced technology bestowed upon us from higher, god-like creatures. Or in Tesla’s case, higher, god-like government funding.

  • avatar
    Ken Elias

    Tesla reminds me of Eclipse Aviation – a start up small jet maker founded by an ex-Microsoftie. The company was all hype, and then failed on almost every promise despite actual certifying a plane (and even that certification is questionable). Worse, the company is now bankrupt having stranded deposit holders on future jet deliveries, and existing customers have no warranty coverage and possibly no parts either.

    I see similarities at Tesla, it’s all “big hat, no cattle.” Software types thinking they can change the world in industries they don’t have a clue about – just that they got rich and believe they’re all powerful. The Tesla vehicle cannot make any money at low production rates even at its current price tag – and won’t ever make money. Hey it’s cool, but impractical. Tesla would be a better company if it perfected technology and sold/licensed that to a mass production manufacturer, rather than trying to develop its own car.

    So while Tesla’s technology so far may be worthy of continued development, it’s certainly not worthy of government money from the Energy Department in the amounts requested to try and build a new car company.

  • avatar

    Amazingly enough, I have actually seen and photographed a Tesla out on the wild.

    For all you Bay Area TTAC readers, I saw it parked in Belmont near the Kabul Afgan Restaurant. It had plates, and when we came out from dinner, it was gone.

    Just may be the only one I ever see.

  • avatar
    windswords

    Babylon 5 FTW! One of the best Sci-Fi shows ever. Maybe Tesla could make an electric pickup or SUV. They could call it the Black Star (another B5 reference, lest anyone think I’m getting racial).

  • avatar
    Conslaw

    Ok, Tesla has only delivered 100 cars, but the Tesla is better than any of the electric cars delivered by the Detroit 3. Could GM or Ford have created a better car for less investment than what was sunk in Tesla? I doubt it. If it was easy, somebody else would have done it better by now. Prior to the Model T, cars were handbuilt, and even the more pedestrian models cost the equivalent of $100,000 in today’s money.

    I don’t know whether Tesla deserves the new money; but I think they deserve some credit.

  • avatar
    Droid800

    Screw Elon Musk. He deserves to have this blow up in his face because he’s an arrogant, egotistical asshole that has no business running anything.

  • avatar
    dean

    Heh. You can tell who has and hasn’t been around TTAC for a while.

    Those of you that feel RF is being too harsh on Tesla: start reading from Tesla Birthwatch 1. You’ll get a better sense of where he’s coming from.

  • avatar
    vozilka

    double post

  • avatar
    vozilka

    Conslaw

    Tesla has not delivered but basically refitted (at best) imported, foreign produced cars.
    Look in details deep under the skirt what a Tesla technically is.
    A old british made model Lotus Elise including carcass, brakes and cabling e.g minus motor shipped over ready made in container from GB. In the trunk are then a few thousand chinese imported batteries slapped together with a primitive cooling system (consuming a lot of juice) and screwed a (after a lot of till today persisting problems) imported drivetrain in.
    Tesla US has to ship every car having got a punch at a parking lot back to GB (or exchange the whole part) as there technically unable to repair any damage to the cars hull. Only the Brits can repair that back home, where the car comes from- what a humiliation for a country having had a men on the moon.
    Think that!

    The Tesla has not even the conductive charger the EV1 had in the last century.
    Tesla holds only a handful (not all fingers counting) very weak patents on their product- if any.
    So much for “innovation” and “American product”

    Thats not the future – there must com more from proven american inventions’ capability then selling a Barbie doll made in Guangdong as US product.
    And I can understand the problem some have meeting with Allan Musk or covering (actually he has highjacked the company) his car
    He is a men without any friends – for more then one good & sound reasons.

    Droid800 : was right on the money when he wrote:

    December 10th, 2008 at 10:49 am

    Screw Elon Musk. He deserves to have this blow up in his face because he’s an arrogant, egotistical asshole that has no business running anything.

  • avatar
    ZoomZoom

    Conslaw :

    I don’t know whether Tesla deserves the new money; but I think they deserve some credit.

    Not to pick on you… but when the question “deserves the money” is even merely considered, then we are truly lost.

    It IS a bailout, then.

  • avatar
    CarnotCycle

    Despite the consternation his favorable treatment has caused others in CA’s business community, Musk might get the money.

    He’s got things lined up in his favor. Lots of celebrities who like their vaporware cars for instance. His Tesla thing is an politically-correct mirage of having your cake and eating it too (electric green socialism, but with some sex appeal). And he has experience in the byzantine diving for Federal dollars game.

    Where did he get the experience? SpaceX. That company is I think one-for-four in launch attempts vs. launch successes with that rocket. Hasn’t launched a paying private payload yet. The company is living off of Federal development money in a contract called “COTS” and it takes political wrangling to secure those funds (lots of would-be space companies out there…Kistler Aerospace was the other big winner in the COTS allocation, and they promptly blew $50 million in tax dollars and then went tits-up, kind of a microcosm of GM’s fate).

    With so many ducks lined up in his favor in these times, I suspect we will all be subsidizing George Clooney waiting for a Tesla before long.

  • avatar
    bunkie

    “Where did he get the experience? SpaceX. That company is I think one-for-four in launch attempts vs. launch successes with that rocket.”

    In all fairness, for a launch vehicle that has its own engine design (not off-the-shelf), that’s not a bad record. Especially when you look at the third launch failure which not hardware-related (it was a timing issue where the upper stage ignited too soon after separation). Of all the private space startups, they are the ones most likely to make it.

  • avatar
    guyincognito

    Blackmail, the new begging. Freaking brilliant. Musk will get the money and use it to keep celebrities from having to pay the true cost of the Roadster while reserving a nice little chunk for himself.

  • avatar
    Dutchchris

    Since electric is the future (like it or not)and Tesla is the poster boy of the electric revolution it should be supported. Only the production of the roadster that is. No need for white elephants.

    Lest the big car firms can’t point at a bankrupt Tesla for an other excuse to stall mass production of EV’s.

  • avatar

    “Since electric is the future (like it or not)”

    Huh? I think we’ll see viable cold fusion long before we see pure EVs with the range, recharge times, and cost equal to an ICE. Unless you want to invest in electric roads, EVs will never work. Electricity is not portable, nor is it lightweight.

    And people think I’m nuts using waste veggie oil. At least I’m not delusional!

    –chuck

  • avatar
    tesla deathwatcher

    Yes, Elon Musk probably will get the money. Lobbyists are in a feeding frenzy, and all kinds of government celebrities have ridden in and raved about the Tesla Roadster. They will decide that Tesla deserves the money.

    We are slip-sliding our way into socialism. No longer does the market determine success or failure. The government picks the winners and the losers. A sad day.

    (I thought I saw a different editorial yesterday for Tesla Death Watch 40. What happened to it?)

  • avatar
    ihatetrees

    chuckgoolsbee:
    I think we’ll see viable cold fusion long before we see pure EVs with the range, recharge times, and cost equal to an ICE.

    +1.

    Although, we may see an electric drivetrain (replace the tranny – like a locomotive) powered by an ICE. Torquey electric motors, their switchgear, and software are getting better and cheaper. I’d bet on THAT sort of tech revolution over battery powered electrics.

  • avatar
    savuporo

    Yes its obvious that lithium-powered BEVs cannot be viable cars in _any_ role and the execs at Mitshubishi, Nissan, Renault, Bollore/Pininfarina, Optimal/Joule and quite a few other companies are all smoking pot.
    Who would want anything like they are building built in US ?

  • avatar
    savuporo

    Yes its obvious that lithium-powered BEVs cannot be viable cars in _any_ role and the execs at Mitshubishi, Nissan, Renault, Bollore/Pininfarina, Optimal/Joule and quite a few other companies are all simply smoking pot.
    Who in the right mind would want anything like they are building being built in the US ?

  • avatar
    savuporo

    Yes its obvious that lithium-powered BEVs cannot be viable cars in _any_ role and the execs at Mitshubishi, Nissan, Renault, Bollore/Pininfarina, Optimal/Joule and quite a few other companies are all simply smoking something illegal.
    Who in the right mind would want anything like they are building being built in the US ?

  • avatar
    healthy skeptic

    Hey, whatever else can be said about Tesla, I think we can finally dump the “vaporware” charge. Give them that much. Even if they ultimately go down in ignominious defeat, they’ve still put about 100 production cars out on the road so far.

    If you got run over by one of them, you wouldn’t calling them vaporware.

  • avatar
    doug

    Doesn’t look like vaporware to me:

    http://www.oncars.com/video/279/2009-Tesla-Roadster-Part-3-of-3-Performance

  • avatar
    tesla deathwatcher

    You are right, the Tesla Roadster is not vaporware. We should give credit where credit is due. The Roadster is a fine car. Not a technological marvel, and very expensive (even if you do not add in the $150 million Tesla has burned through to make 100 cars). But a fine car nonetheless.

    But White Star is vaporware. Of the worst sort. And it is galling to see Tesla try to get $650 million of taxpayer money to fund it.

  • avatar
    healthy skeptic

    tesla deathwatcher:

    Fair enough… I agree. I’m pretty much against any kind of bailout for any car co, Tesla or otherwise.

    I think Tesla’s main problem, far and away, is that they are grossly undercapitalized.

    A word to the wise: if you’re thinking about starting up your own car company, (thereby horning in on a mature industry with well-established players and very high operating costs), be prepared to invest at least nine digits. Ten digits are probably even better. Making cars isn’t the same thing as paying 12 guys to sit in cubes writing code.

    Tesla needs a billionaire angel investor or two.

  • avatar
    stuki

    healthy skeptic :

    No one will put up 10 digits on spec, especially now. Unless The One is promising them a backstop, that is.

    If Your development needs 10 digits, you need to find ways to sell incremental advances until you get there. License, build components, whatever. That way, when you finally go full monty, you are doing so with a good share of already proven and debugged parts.

    As the software guys say, release early and often.

    But then again, contrary to popular belief, Musk is not really a software guy, but rather a fast talking megalomaniac who happened to be situated advantageously at a software company when it took off.

  • avatar
    fallout11

    Tesla is selling pre-fabricated electric “kit cars” for an outrageous sum and deserves neither accolades nor tax dollars. What they do have is chutzpah and hubris.

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