Life & Style | Motoring
Tesla to seek share of $25b US auto loan
Tesla Motors Inc, the Silicon Valley electric car start-up forced into a Detroit-style restructuring, expects to secure a share of the Dh91.84 billion ($25 billion) pool of taxpayer-backed loans recently approved by the US government to benefit the auto industry.
- Reuters
- Published: 23:46 October 26, 2008
Detroit: Tesla Motors Inc, the Silicon Valley electric car start-up forced into a Detroit-style restructuring, expects to secure a share of the Dh91.84 billion ($25 billion) pool of taxpayer-backed loans recently approved by the US government to benefit the auto industry.
"We'll put it to probably the best use of any other company," Elon Musk, Tesla's founder and now chief executive told Reuters.
"We'll spend it very effectively for the taxpayers, and I don't think the taxpayers will get better value from any other car company," he said. Any share of the $25 billion loan programme Tesla secures would be in addition to another $200 million in still-pending loans from the US Department of Energy.
The San Jose, California-based company is counting on the taxpayer-backed loans to offset up to 80 per cent of the development cost of its next model, an electric sedan expected to cost $60,000 and compete against the likes of the BMW 5-Series for luxury and performance.
Tesla markets the $109,000 Roadster, the first battery-powered performance car and a vehicle that has become both a symbol of the promise of electric cars and the financial perils of rushing the new technology to the market.
Tesla has delivered only about 40 Roadsters despite having received over 1,200 orders.
The company ran into a series of problems with the car's transmission that caused cost overruns and production delays before settling on BorgWarner Inc as its supplier.
"There were definitely some errors made on the Roadster that made it more expensive than it needed to be," said Musk, who made his fortune as founder of the online payment system PayPal.
When Tesla failed to secure a $100-million investment round earlier this month, Musk moved to cut 24 per cent of the company's work force and to delay development work on the electric sedan, known internally as the "Model S." He also took the CEO post from Tesla's former chief executive, Ze'ev Drori.
"I think if the economy had not gone as negative as it did, I would not have made the change and taken the full CEO responsibilities myself," said Musk. Ze'ev Drori is vice chairman of Tesla.
For now, Tesla is not actively seeking funding from venture capitalists or private equity, Musk said, adding that despite its problems, he is not interested in selling the company to an established car maker.
"We have had expressions of interest in buying Tesla," he said.
"Unless I was very confident that Tesla would flourish as part of that car company, I wouldn't be interested in selling."
Though Tesla is among the most high-profile makers of electric vehicles, it faces intense competition from established automakers like General Motors Corp and Nissan Motor Co Ltd, and upstarts like Chinese battery maker BYD Co Ltd.
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