More Sparks From Tesla
Tesla Motors, the fledgling maker of electric sports cars, admitted today it is losing money and in a “critical phase” financially. An undisclosed number of Tesla’s 250 employees will be laid off (and the current chief executive will move to the board of directors), and its Detroit-area office will be shut down.
Further delays and setbacks for the company’s production and growth plans were also announced. Interestingly, these developments come at a time when the public’s interest in electric cars seems to have taken off, given the reaction to General Motors’ recent showing of the production-ready Chevrolet Volt and the introduction of several new electric protypes at the Paris Motor Show this month.
Elon Musk, the Silicon Valley entrepreneur who has been the chief investor in Tesla, said in a blog posting Wednesday on the company’s Web site that with SpaceX, his separate project to develop private-enterprise rockets for outer space, having achieved its first successful launch, he now has more time to devote to turning Tesla into a profitable venture.
So Mr. Musk is taking over as chief executive officer of the company. He described the moves as “a modest reduction in near-term headcount” at the company’s San Carlos, Calif., headquarters and a further reduction resulting from a “consolidation” of satellite operations.
Other factors — beyond the recent difficulties of raising capital — may be involved. In a separate posting last month on her blog, Mr. Musk’s wife, Justine, a novelist, said she is divorcing him. It is unclear what effect a divorce, and its impact on Mr. Musk’s holdings, might have on financing for new-product development and manufacturing.
Mr. Musk has previously held the titles of product architect and executive chairman, since joining the company in 2004, a year after its founding. The former chief executive, Ze’ev Drori, will stay on Tesla’s board of directors, Mr. Musk said. Mr. Drori had taken over the chief executive duties last November after the company’s founders, Martin Eberhard and Marc Tarpenning, left. Opinions vary as to whether they were pushed out or quit.
Either way, the turmoil-roiled company’s first vehicle, its $100,000 Tesla Roadster, has now endured many delays. The first production model was finally delivered (to Mr. Musk) in February. General production, which began in March, has been slowed by reports of a balky transmission, which is being replaced, and in turn, a slow ramp-up in production capability.
As of mid-September, the company said 27 vehicles had been delivered to customers. The company announced in August 2006 that it had successfully solicited $100,000 deposits from 100 prospective buyers, to whom delivery was promised beginning in mid-2007.
As of last May, Tesla reported that it had 600 firm orders for its cars, and 400 more customers on waiting lists.
The latest delays push back until at least December the point at which Tesla will have the production capability for up to 100 vehicles a month, Mr. Drori had noted recently in a separate announcement. Tesla also is continuing a profitable venture, producing powertrains for other car companies, Mr. Musk noted.
Development has been suspended, Mr. Musk said, on the company’s next vehicle, the Model S, while the company awaits funding from promised federal loan guarantees. “If all goes reasonably well,” Mr. Musk said in his blog posting, “we will receive that approval in Q2 next year.” That funding is contingent upon completion of a planned San Jose plant, and its passing environment certification. That should delay the new model about a year from its originally promised production date, until mid-2011, he said.
Mr. Musk thanked customers, who he said have stuck with the company “through thick and thin,” and promised to reward them with a secret viewing of the Model S prototype. No time frame was promised, however, for that sneak preview.
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