By on January 30, 2009

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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17 Comments on “Tesla’s Factory Plans On Hold...”


  • avatar
    usmc4hire

    I heard that they only need 90 mill for the plant. The other 10 mill is for an extension cord.

  • avatar
    Robbie

    If they get this federal money, the only conclusion possible is that both Republicans and Democrats are making it a contest to try be the most wasteful with senseless spending projects.

  • avatar
    guyincognito

    So once they blow $350M of the $400M on manufacturing facilities, what will be Tesla’s strategy for raising the $1B needed to develop an all new advanced technology sedan?

  • avatar

    Screaming yellow zankers. There I’ve said it. Now I can go test a real car.

  • avatar
    Jared

    Tesla will be financially bankrupt within a year. They’ve been ethically bankrupt for quite some time.

  • avatar
    Cavendel

    usmc4hire :
    I heard that they only need 90 mill for the plant. The other 10 mill is for an extension cord.

    God, Pepsi up the nose hurts.

  • avatar
    tesla deathwatcher

    A couple of comments.

    First, Tesla never said before that it was trying to raise $100 million from venture firms to fund its San Jose facility. Now it had planned for that all along, and had tried, but failed? I think that is hogwash.

    [Update — my mistake. Looking back, Tesla did say last September that it planned to use $100 million from a funding round led by Goldman Sachs and $150 million in government loans to build the facility.]

    Second, Tesla’s proposed “greenfield” Zanker Road site in San Jose does qualify for the government loans. But Tesla thinks that the government will favor “brownfield” sites. So Tesla quickly abandons the plan it had been pushing for months and looks for a new brownfield site.

    Tesla gets Albuquerque and New Mexico’s governor to woo it, and then runs away leaving the bride at the altar. Tesla talks San Jose and California’s governor into bed with it, and then does the same thing to them. Shame on you, Tesla.

  • avatar
    factotum

    There are plenty of former military bases from which Tesla could choose. If you watch Mythbusters, you’ll often see them at the abandoned (by the govt.) Alameda Naval Air Station.

    As Top Gear proves, runways and vast aprons of concrete provide endless opportunities for automotive research. Local governments eagerly seek tenants for these properties, too, which translates into incentives galore.

  • avatar
    Edward Niedermeyer

    Tesla Death Watcher:

    ATVMP or “136 loans” were passed with the purpose of “reequipping, expanding, or establishing a manufacturing facility.” According to the interim rules, a new facility would qualify. However, there are also rules in place requiring that the project be “financially viable” without the loans. I don’t see how Tesla’s plans fit into that category.

    On the other hand, now that the money has been appropriated, who knows how it will actually be disbursed. I can’t imagine there are many “financially viable” retooling plans right now, given the state of the industry. You tell me…

    “In today’s interim final rule, the
    Department interprets the term
    ‘financially viable’ to mean that an
    applicant must demonstrate a
    reasonable prospect that the Applicant
    will be able to make payments of
    principal and interest on the loan as and
    when such payments become due under
    the terms of the loan documents, and
    that the applicant has a net present
    value which is positive, taking all costs,
    existing and future, into account.”

    Also remember that 136 funds were nearly spent on Bailout round 1 by McCotter and others. So really, they’re not so much rules as guidelines.

  • avatar

    That site on Zanker is next to smelly salt ponds, a smellier landfill and the smelliest sewage works. It is completely surrounded by office buildings, a shopping mall and an ever expanding freeway intersection. So it isn’t what I’d really call “green field”.

    Looking at the number of levees surrounding the area, I think it is actually underwater.

  • avatar
    Conslaw

    There’s a brand new 80% built factory in Tipton Indiana that Was going to be used for Chrysler/Getrag transmissions. Apparently, they forgot to agree on who was going to put all the machinery in the plant, or some silly little detail like that. I bet Tesla could get a good deal on it. Plus, they’d only be 40 miles away from an actual running Lithium-ion battery production facility, Enerdel’s Indianapolis plant.

  • avatar
    cancercomesfromoil

    So let me get this right, the guy ditched his smart wife and left her with 5 kids for a teenie bopper that he was cheating with and announced a battery deal that was really just an R&D contract and has multiple lawsuits against them by other companies, and may have a car that causes cancer and has created a pool of past staff that write endless blogs about how bad they are and then raised prices because they had no idea how to build a car and lied to the City of San Jose and their customers and applied for their only source of funds without even reading the rules that told them in advance they should never try to build a factory and is trying to sell an insanely expensive car in a depression… ?? … Cool idea…

  • avatar
    cancercomesfromoil

    It takes a year or more and several lawsuits to get a full environmental impact new construction factory report done and if anybody sues to protect “indian bones” or coyotes, or ground squirrels or anything else, then you can add another 2 years. Fisker could sue them to protect ground squirrels which ARE on that site, just to piss with Tesla because they hate them and totally get away with it…No other company applying to 136 was nuts enough to propose a new building. ZAP, Bright, Fisker, The SUV guys etc. all all re-tasking existing plants just like DOE TOLD everybody to do. The published text on the DOE site clearly states that building is going to put you at the bottom of the pile.

  • avatar

    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.

  • avatar
    Rix

    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

  • avatar
    shaker

    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!

  • avatar
    tesla deathwatcher

    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.

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