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Tesla Nabs $465M Government Loan To Build Model S
SignalFreq writes "Tesla Motors, based in San Carlos, California, was approved yesterday for $465M in loans from the Department of Energy's Advanced Technology Vehicles Manufacturing program. Tesla plans to use $365M of the money to finance a manufacturing facility for the Model S (review, Letterman video) and $100M for a powertrain manufacturing plant in the SF Bay Area. '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. Tesla expects the Model S to ship in late 2011 and the base cost to be $57,400 ($49,900 after a federal tax credit). Ford received $5.9B and Nissan received $1.6B under the same program."
Tesla is the only company in the world selling production electric cars that are fully street-legal. They started with a $100K car, and now they're doing a $50K car. They have a $30K car planned for after that.
Basically, you need economies of scale to get the cost of these cars down. Tesla's riding that curve, and plans to eventually have cheaper cars than Ford. This is a potentially great place to invest in American innovation, not to mention the environmental benefits or jobs.
Celebrate failure, and then learn from it - Nolan Bushnell
Wrong in so many ways.
1) It's not a grant. It's a loan.
2) The Model S is right in the price range of high-end luxury sedans (which is what they're making).
3) Tesla got the overwhelming majority of their Roadsters when there was no EV tax credit. Sure, it'll increase their Model S sales volume, but they'd still sell a ton without it.
4) The whole world is lacking in venture capital right now. It's called a financial crisis. About the only entity that investors trust to loan money to these days are major world governments. Hence, that makes them effectively the only entity able to give loans worth half a billion dollars to all but the most established large businesses.
5) If you have such a problem with half a billion dollar loan, I'd hate to see how you'd react to the $5.9 billion loan Ford just got from the same program.
I tore these out of your symbol, and they turned into paper.
It's not a handout. It's a loan. You know like the loans you can get for small businesses from the feds and state governments.
Exactly. Tesla's approach is perfectly cogent. Starting a car company is a *huge* expense. Look at what Coda is having to go through to bring a new car to the US -- they mentioned that they still need to crash another *30 to 40 cars* to get certified. And that's just the half of it. There are no volume parts producers for EV components. Look at the Roadster transmission fiasco -- there literally was no multi-gear transmission in the world that would work with their motor, and when they spent a fortune trying to get a company to engineer one for them, what they ended up with couldn't take the stress.
The logical approach, then, is to piggyback as much work as you can onto that of an existing manufacturer (in this case, Lotus), focus only on what's different, and start at the high end so that you can absorb the capital costs into the vehicle price without creating sticker shock. People expect a carbon fiber car that does 0-60 in 4 seconds to be expensive. The fact that low-volume EV drivetrain components are super-expensive doesn't matter there, because so are the low-volume ICE components that they compete against.
This is the next logical step: an independently developed, not-piggybacked, luxury sedan. This means building a large-volume factory, with a chassis developed from scratch that's designed for your EV needs. Of course, this is incredibly expensive. Hence the need to raise a ton of capital. In the middle of a financial crisis. :P
Once they've retired that risk, even higher volumes/lower prices become realistic. Which is their plan with the Bluestar.
That seems to be the same approach being taken by Fisker. I think a reasonable alternative approach is that being taken by Aptera. Three wheels to skirt the federal requirements, but put a heavy *independent* focus on safety, with a vehicle that's so uber-streamlined and lightweight that it simply doesn't need a powerful drivetrain or large battery pack to perform well. Hence they can start at near the bottom of the market, where there is a lot less competition. Once they're rolling off the lines, you can expect to see from them what Tesla is doing now -- raising large amounts of money to build a factory for a more mainstream, higher volume sedan (although they'll almost certainly keep their extreme-efficiency focus).
I tore these out of your symbol, and they turned into paper.
Although I don't doubt that there are political reasons for having some Tesla mfg in the US (not to mention tariffs, etc) there are also some practical ones:
1) You can't just take some laid off Mexican auto assemblers from an old GM plant, put them in a new building and tell them to start making Electric car drivetrains -there are probably entirely new process steps (not to mention components) which would make this a non-starter
2) they probably need to tweak that process as well as being able to introduce changes in parts as the design is tested and improved
therefore it makes sense for the factory to be close to where design/engineering takes place -not to mention that there is also a highly trained, technologically able workforce in the Bay Area.
Also, thanks to Hitech, Lockheed, Lawrence Livermore Labs, etc there are a great many machine tooling shops in the area which are second to none.
Think of this as a pilot mfg plant -they will no doubt try to go somewhere cheaper when it comes time to produce quantities in the 100ks
On the other hand, we have the only large scale auto manufacturing plant left on the West Coast just down the street from me: http://www.nummi.com/ , so stranger things have happened.
-I'm just sayin'