Tesla's Factory Plans On Hold

Edward Niedermeyer
by Edward Niedermeyer
tesla s factory plans on hold

Tesla has failed to secure the $100m it needed to continue with plans to build a headquarters on San Jose, CA’s Zanker Road, reports the San Jose Business Journal. Tesla had also planned to build a $250m manufacturing facility on the site, which would have assembled the firm’s development hell-bound White Star sedan. “We abandoned that because the VC financing environment became so tight and difficult,” say Tesla spokesfolks. Instead, Tesla has applied for about $400 million in two federal, low-interest loans through the Advanced Technology Vehicle Manufacturing Program. It is seeking $250 million for the Model S manufacturing facility and $150 million for an advanced battery and powertrain facility. But this means that the Zanker Road site can not be used, since the ATVMP funds may only be used to refurbish and retool existing facilities, not build at greenfield sites like Zanker Road. “We’re very optimistic, even with Zanker Road,” said Michelle McGurk, senior policy adviser to San Jose Mayor Chuck Reed. “We know all the reasons Zanker Road made sense, and it still might make sense depending on how things shake out.” Or not. “We can’t afford to do anything that would jeopardize our ability to get the federal loan,” says Tesla spokeswoman Rachel Konrad. She notes that Tesla is looking at other existing sites which might qualify for refurbishing loans. And the march from private to public funding sources for the auto industry continues unabated.

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  • Ronnie Schreiber Ronnie Schreiber on Jan 30, 2009

    At the NAIAS, when asked where the funding would come from for the S sedan, which would include assembly and drivetrain facilities, Elon Musk only mentioned public funding. He said the $350 million was needed,$250 million for the assembly facility and $100 million for the powertrain plant. $250 million of Title 170 funds were "more or less approved". He said that they had a "lower cost" application pending for 136 funds.

  • Rix Rix on Jan 31, 2009

    I live about two miles from the site. I can tell you that it has to be the worst site ever devised for an auto plant. First, it is in a waterlogged area near Alviso. This is on the shore of the bay, near an area of tidal flat that floods frequently. And yes, it is protected only by a levee. Those things at the top right of the map are salt ponds, for the evaporation of commercial salt. They are at sea level and the entire area has been reclaimed. Second, Road access is terrible. There is no water access, no rail access (rail does go to the mall, which used to be a Ford Plant about two miles away) and I-880 is one of the most congested in the country. No suppliers around, which means everything must be trucked in through a two lane onramp onto 237 from 880. Did I mention it gets backed up from 7am to 9am and 4:30 to 7pm? By comparison, look at the satellite of the NUMMI plant making Vibe/Matrix in Fremont ten miles north. Plenty of land, road, rail, and easy port access (through port of Oakland) and is close to multiple interstates-if one gets closed, route around it. Tesla: NUMMI

  • Shaker Shaker on Jan 31, 2009

    Rix: The NUMMI link is the same as the Tesla one - Yes, the site looks to be a stanky, soggy mess. Parts would corrode on the shelves!

  • Tesla deathwatcher Tesla deathwatcher on Jan 31, 2009

    Ronnie Schreiber, I had seen a news article from the NAIAS that said, as you did, that Elon Musk claimed to have secured "more or less" the $250 million in government funding needed to build the assembly plant in San Jose. This article, though, suggests that Tesla has not yet done so, and that in fact it may not get the funding. It will be interesting to see what develops.