Tesla can't get funding, postpones plans to build new factory
Looks like Tesla's decision to jack up options pricing on the Roadster to make the company's financials more enticing to investors didn't necessarily pay off: the company failed to score the required $100m in private funding needed to start building that new factory and HQ in San Jose. The new plan is to request some $400m from the government's Advanced Technology Vehicle Manufacturing Program and spend it on both the planned facility and an advanced battery and powertrain lab -- which might mean Tesla would have to move elsewhere, since the ATVM requires the money to be spent rehabilitating an older factory. We'll see how this one plays out -- although we're still in love with the Roadster, Tesla itself always seems to be one stroke away from catastrophe.
Update: Tesla got in touch -- full statement below.
[Via Gearlog]
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Tesla announced in September the intention to build an assembly plant to manufacture our four-door, five-passenger, all-electric sedan. The site was an 89-acre vacant lot in San Jose on Zanker Road, known as a "greenfield" site because there has never been construction on it.
However, we reconsidered the San Jose site for a variety of environmental and financial reasons. A primary reason was that the US Department of Energy is awarding low-interest loans to automakers who develop "brownfield" sites (in other words, sites that used to be factories or plants but have been abandoned, mothballed or shut down).
Tesla is applying for a roughly $250 million federal low-interest loan that would finance a 500,000-square-foot assembly plant to build the sedan. Tesla does not want to jeopardize our low-interest loan application, and we believe that building from scratch on a greenfield site would put us at a competitive disadvantage against other automakers and suppliers competing for the $25 billion in low-interest federal loans.
We are in late-stage negotiations with another site to build our sedan, known as the Model S. We will likely have an announcement about the site soon. Tesla is still on track to begin production of the Model S in 2011; there will be no delay because of the move away from Zanker Road. In fact, one of the reasons that Tesla reconsidered the site was because it was not the most cost-effective and expedient means of getting the Model S to market. We still plan to unveil the Model S to the media and public in March in Hawthorne, Calif., where Tesla's design studio is located.
As for the question of the $100 million venture financing round, Tesla announced in October that the company would not try to close that round; the terms were unfavorable and dillutive. Instead, the company announced a $40 million internal financing round in November that is expected to take the company to profitability sometime in the middle of 2009.
