Tesla Motors To Suspend Roadster Production

Wyatt Earp writes with news that a recent SEC filing from Tesla Motors revealed the company plans to stop production on its electric Roadster (and the Roadster Sport as well) in 2011. This will leave the automaker without any cars to sell until the launch of its Model S sedan (financed in part by $465 million in DoE loans) in 2012. Tesla plans to resume production of Roadster models "at least a year" after the Model S arrives. From Wired's Autopia blog: "'As a result, we anticipate that we may generate limited, if any, revenue from selling electric vehicles after 2011 until the launch of the planned model S,' the company says in the SEC filing. That may not be a problem if S production starts on plan and goes off without a hitch, but if Tesla hits any snags, things could get ugly fast — a point it concedes in the filing. 'The launch of the Model S could be delayed for a number of reasons and any such delays may be significant and would extend the period in which we would generate limited, if any, revenues from sales of our electric vehicles.'"

Comments

Re:Uh oh

[Anonymous Coward]

There isn't anything for them to prove. They aren't an alternative.

It's either price or range. Can't have both. I'm not spending $50k+ on a vehicle and I'm not driving one with less than a 300mi range.

More Publicly Financed Toys for the Wealthy

[CodeBuster]

The Tesla model S sedan will retail for $50,000+ which means that less than 20% (and that is being very generous) of Americans will be able to afford this car. Tesla is a niche and it will always be niche. The best that they (and the taxpayers) could hope for is for them to be bought by one of the major auto manufacturers. Why should the taxpayers be financing car production by boutique manufacturers for wealthy people? If the government subsidizes heavily so that average people can buy this particular car then you have to explain why the government should be in the business of picking winners and losers in the market for private automobiles. If Tesla is such a good investment then why cant they raise $450 million from the private equity market instead of from taxpayers; 99% of whom will never sit behind the wheel of a Tesla?

Re:More Publicly Financed Toys for the Wealthy

[Thing 1]

Tesla is a niche and it will always be niche.

Agree, and strongly disagree.

"Cars are a niche, people will always ride horses for transportation."

"Computers are a niche, they take up a whole room, there isn't really demand for more than six or so of them."

"Planes are a niche, they're useful in war but that's about it."

We the taxpayers should finance this company, and not bail out the "big 3" (two, really, Ford didn't need as much help), because they're proving that they can make something revolutionary that will work its way down to being affordable to everyone. The big 3 are just doing more of the same. And slower.

And besides, it's not a gift, it's a loan.

Re:More Publicly Financed Toys for the Wealthy

[Kneo24]

Well, if it was generally that easy, I'm sure they would have done it sooner. The fact of the matter is, for any startup, you need to target the rich to not only bring down the price of economies of scale, but to pay off for the R&D initially. Yes, there's still R&D going on, but their biggest hurdles are out of the way.

To suggest that they're just a boutique manufacturer for only the wealthy shows ignorance on your part. That isn't their primary goal. Their primary goal is eventually make an affordable electric car for everyone that has style, performance, and still have the vehicle give a good range. They've done the really expensive car. Now they're doing the sort of expensive car. Next they'll do the even cheaper version. This has been their stated road-map for quite some time.

Besides, the government subsidizes all sorts of things, some things I'm sure you couldn't initially afford until cheaper variants came out. Are you against that too?

Re:More Publicly Financed Toys for the Wealthy

[avilliers]

The Tesla model S sedan will retail for $50,000+ which means that less than 20% (and that is being very generous) of Americans will be able to afford this car. Tesla is a niche and it will always be niche. The best that they (and the taxpayers) could hope for is for them to be bought by one of the major auto manufacturers. Why should the taxpayers be financing car production by boutique manufacturers for wealthy people?

It's new technology; even if this model never takes off the expertise can spill over. It's not like giving money to Ford to keep more Mustangs on the street. It's a potential benefit even if the parent business fails.

It's a pretty good way encourage technology development. A lot of private people think they may be able to make it profitable eventually, they've put in their money, so the government leverages work that may prove valuable beyond the short-term by giving loans. No new government buildings needed, no new bureaucracy you can't kill.

I don't know enough about Tesla or the industry to say if this particular one is the best use of money, but it's not unique or anything. Corporations often get subsidies for new tech; basic research just doesn't get done at measurable levels these days in private industry. Bell Labs isn't what it used to be.

If the government subsidizes heavily so that average people can buy this particular car then you have to explain why the government should be in the business of picking winners and losers in the market for private automobiles.

The "picking winners and losers" thing has really become a meme. Government policies necessarily determine winners and losers all the time, of course, with zoning laws, housing subsidies, mileage standards, public roads, wars for oil, leasing out of federal land, tarriffs, and so on.

If we (ie, the people through the government) chose to spend massive subsidies on electric cars, it would be because we thought the benefits (noise, local pollution, energy flexibility, global warming) outweighed the costs. We'd be saying that cars that spew out those pollutants are "losers," and it's worth paying for them to get off the roads. That is fundamentally a government business--making decisions about the common areas in communities.

If Tesla is such a good investment then why cant they raise $450 million from the private equity market instead of from taxpayers; 99% of whom will never sit behind the wheel of a Tesla?

Because, obviously, a good investment for the government is not the same as a good investment for a private investor. We don't expect corporations to identify candidates in kindergarten and pay for their schooling through 12th grade and college. They'd never get their money back, at least not in a free labor system, but society as a whole benefits.

Your points are really all cookie-cutter stuff, by which I mean they apply to any government intervention, not just Tesla, not just for putatively rich people. But even in freshman college micro-economic models, concepts like externalities might justify state intervention, and in the real world, actual or de facto subsidies for other industries require it. Given this specific intervention is a loan, not some recurring grant and not regulation, which will let the company live or die in the market (as evidenced by the actual story), do you have any actual reason to oppose *this one*, and not just all?

DoE loan

[doug141]

Taxpayer bears the risk of default, Tesla execs get to keep any windfalls of development, all the while drawing their salary against the loan. Doesn't sound like the best deal for the taxpayer to me.

Re:Uh oh

[obarthelemy]

http://www.bts.gov/publications/bts_special_report/2007_10_03/html/table_02.html

not very recent, and does not answer the question of how often very long trips occur, but still, range does not seem to matter a whole lot.

I think the issue is more about getting to a point where it makes economical and practical sense to have an electric car for daily use, and rent a fuel car for longer trips.

Re:I don't get it.

[BigSlowTarget]

Its a brilliant business model: Sell $2 million worth of roadsters to generate publicity and get the hang of building electric, get a 400+ million dollar low interest loan, throw the dice on getting a product out and if you win you're rich. If you lose declare bankruptcy and retire on the salaries you paid yourself from the loan.

If they tried to actually build cars they might get another $2 million in revenue which might get them one million in cash flow but it doesn't even compare to the $400 million they can play with courtesy of the government and it distracts the company from paying attention to the $400 mill project.

These guys are brilliant hypesters with good government management skills.

Re:Quixotic business plan

[TheRaven64]

Energy density of lithium batteries: 1 megajoule/kg

Energy density of gasoline: 45 megajoules/kg

That's a slightly misleading statistic, because it doesn't include the mass of the engine or drive train in the calculation. Electric cars are much simpler mechanically. You need to compare the mass of fuel, a fuel tank, engine, gearing, and drive train to the mass of batteries plus electric motors and then see how much power you've got for both. The electric car comes out a lot closer when you do this.

Then you need to factor in the fact that you can charge an electric car at home. How many trips does a tank of petrol give you? A week's worth of typical driving? Then if your electric car has only half of the range but can be charged overnight then it's competitive.

Finally you need to compare the cost of the energy and the efficiency of generation. Energy conversion from chemical potential energy a battery to kinetic energy via an electric motor is a lot more efficient than converting hydrocarbon fuel into kinetic energy via an internal combustion engine. Electricity can come from burning hydrocarbons, but it can also come from things like solar, nuclear, wind, hydroelectric and tidal power. Technology keeps making these forms of power cheaper, but scarcity keeps making hydrocarbons more expensive. When 1MJ of petrol costs twice as much as 1MJ of electricity, it makes a difference. Petrol sold in the USA is about 36.6 kWh/US gal, so at $3/gallon that's 0.08 cents per kWh. That's pretty close to the cost of electricity. Once you factor in the relative conversion efficiencies, you pay a bit less per unit of kinetic energy from an electric motor than you do from an internal combustion engine at $3 per US gallon of petrol. When petrol hits $5 per US gallon (which is cheaper than it is in the UK) then it's a lot more expensive than electricity.

Re:Uh oh

[Ihmhi]

Yeah, but like 90% of Americans travel less than 25 miles a day for their commute. For the minority who do need to be able to travel hundreds of miles, then an electric car isn't for you. But for the rest of the crowd it's perfectly fine.

The "limited" range is a just another tactic by the oil and car industry to keep these things from ever getting popular. If your job is a 5 minute drive away and you make a weekly grocery trip 15 minutes away, why the Hell would you need a car with a range of 300 miles? Vacation/family trip, rent a car, take a train, bus, etc.

The range isn't going to improve if people don't buy the damn cars to help fund R&D - with real-world data as well - for future generations.