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]

--
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.

[Andrew @ Feb 2nd 2009 7:21PM]

damn..

[wickedpheonix @ Feb 2nd 2009 7:22PM]

So you're saying the French killed Tesla?! WTF?!

[wickedpheonix @ Feb 2nd 2009 7:23PM]

Just bring this to Obama's attention and your savior will probably be able to pull a few strings.

[Bufsabre @ Feb 2nd 2009 8:09PM]

let it go dude, let it go

[Tom @ Feb 2nd 2009 9:11PM]

Soon as Obama stops being a hypocrite, then ill let it go.

No lobbyist pledge = 17 lobbyists in your administration
Ill fix the economy = New grass for the national mall, honeybee insurance

[a ham sandwich @ Feb 2nd 2009 9:21PM]

"New grass for the national mall"


dude, do you have any idea how many people were standing on it?! :P

[a ham sandwich @ Feb 2nd 2009 9:22PM]

::sigh::

apparently, engadget's comment system has a problem with faux xml tags. to my above comment add opening and closing "" tags.

[a ham sandwich @ Feb 2nd 2009 9:23PM]

and it also has a problem with putting them in quotes. i give up.

"joke", btw...

[John @ Feb 2nd 2009 9:36PM]

you have to use HTML character codes - >

[randy @ Feb 2nd 2009 7:24PM]

shucks, gas-burning cars are still cheaper and faster than coal/nuclear-power-plant charged battery cars, maybe that had something to do with the fiasco.

[Martin @ Feb 2nd 2009 7:43PM]

Tesla and electric cars arent the answer - it takes too long to recharge - we need something as convient.

Did you see the Honda Hydrogen car. Thats the way ahead. Get the hydrogen made using renewable electricity (solar or wave technology) - then gas stations can stay alive by pumping hydrogen.

win , win ,win

[reuben @ Feb 2nd 2009 8:43PM]

Don't you think we should be funding research into Cosmic Microwave Background Radiation too?
http://map.gsfc.nasa.gov/universe/bb_tests_cmb.html
What if there WAS an all permeating energy we could "feel" or tune-into...Tesla would be happy at least.

[KarlW @ Feb 2nd 2009 8:43PM]

Hydrogen isn't an alternative to electric cars - it's an alternative to batteries. The H2+O reaction gives off energy, but it's not like a rocket that makes your car zoom down the street and off in to space - it provides the electricity for the same motors Tesla are using right now.

I disagree that electric cars don't have a future. They're new, so you'd expect minor issues like long recharging times. That can be improved upon. Electric cars have my vote over Hydrogen because:

- Easier to refill. Plug it in if you forgot to charge it up. If it used Hydrogen, you'd have to walk to the nearest station, buy a tank of highly combustible fuel and walk back with it. No thanks, I've got stuff to do.
- Cheaper. The electricity infrastructure is already in place, delivering power to every home. Hydrogen power would require processing water in some place where electricity is cheap (right now, that means China), and shipping huge quantities of gases around the world - and gases take up a large volume, meaning higher prices. I can easily switch to another provider to get cheaper electricity. It's not that easy to keep hydrogen prices down.

[wickedpheonix @ Feb 2nd 2009 9:13PM]

Battery is the future, not hydrogen - look here

betterplace.com

[ripslymemc @ Feb 2nd 2009 7:24PM]

As much as I'd like to see Tesla motors come to fruition, it just doesn't seem tangible now. Delay after delay comes, and customers have to wait even longer for their cars. Soon, they will get fed up and ask for the money back, which will leave Tesla in deep sh*t.

[why not the LS2LS7? @ Feb 2nd 2009 7:27PM]

This is clearly GM's fault. They killed the EV to satisfy big oil, and now they have created an international conspiracy to kill Tesla too.

It's not because selling $130,000 200-mile range 2-seaters is a bad business, nosireee.

[zac k. @ Apr 15th 2009 9:49PM]

Why dont they just ask obama to add them something in his stimulus package?
.... I mean Obama.... I do not want to offend anyone by not capitalizing the name of their god. My God!

[The Dude @ Feb 2nd 2009 8:21PM]

Mmm, your bitterness sustains me.

[why not the LS2LS7? @ Feb 2nd 2009 7:28PM]

They lose money on each one sold. And not the kind of brag like VW does for the Veyron, that's just saying each one makes a profit too small to ever amortize the R&D costs. No, Tesla makes a GROSS loss on each unit. If you don't understand what that means, that means that each one you make loses you more money, and thus the smartest way to lose the least money is to stop making them immediately.

Now, knowing this, are you ready to invest in Tesla?

[Aamir @ Feb 2nd 2009 7:30PM]

They aren't good anyways!

[Eh @ Feb 2nd 2009 7:50PM]

I think it all fell apart when they tried to design a fuel efficient car for rich people.

[jabber @ Feb 2nd 2009 7:59PM]

Maybe if it was pink, with carpet on the dash, and some fuzzy dice hanging from the rear view, Eh??

[Alex @ Feb 2nd 2009 8:41PM]

@iEye

We don't have to steal your iPhone to call you a loser.

On a side note, why does my picture keep deleting itself? It's driving me insane...

[GHynson @ Feb 2nd 2009 8:19PM]

If they would stop being so F*(^^@ greedy,..
and design and sell a car for the masses,..like say for $30k.
Then they might get somewhere.
Who the F^@$) is going to pay 100k+ for a electric car when
must stuck up rich F)**$ faces want a lambo or royce,..

[kadajawi @ Feb 3rd 2009 1:16AM]

You do know that those rich people all buy Priusses in masses? And look at the list of people who ordered a Tesla. Half Hollywood is on that list, and quite a few CEOs etc. Rich people are buying that thing, the problem is that Tesla is not charging enough.

Also, electric cars need to be desired. Yeah, there are things like the G-Wiz or so. I'd much rather have tripper, thanks. No one except for people who hate cars would buy such a thing. Which means sales won't be good, and the R&D costs which are quite high won't be earned back, ever. Ok, Tesla unfortunately won't do that too, but the idea was right. A car that improves the image of the electric car, that people want, and that (some) people can afford (look at the performance figures. Comparable cars cost more, except for the Lotus Elise and some other hardcore racing machines). The technology developed for the Roadster is getting tested in the Roadster, and can now be adapted for a sensible high volume car that is practical AND affordable.

[KarlW @ Feb 2nd 2009 8:23PM]

Dude, do you even know the value of money? $100 million is a lot by anybody's reckoning. Hollywood stars and sportspeople get a lot, but hundreds of millions is extremely rare if it even happens at all.

[Tony @ Feb 2nd 2009 8:36PM]

Actually Top Gear did a test of the Tesla, two in fact because the first broke down and the second only got about 50 miles on a full charge - it basically finished the car as serious option for anyone that saw the program.

Anyway, as has been said already, hydrogen rather than battery seems the most viable electric car.

[go seki @ Feb 2nd 2009 10:08PM]

yeah .. recent episode James May showed off the Honda Clarity .. http://world.honda.com/FuelCell/

I REALLY hope TG get to test this >> http://www.shelbysupercars.com/news-012209.php

maybe they can grab some bailout money from mr/ms US Taxpayer

On that note why don't the oil companies just buy the car companies .. they have the money.

[Major4Play @ Feb 2nd 2009 8:39PM]

It's spelled Bentley

The reason they can't get funding for the factory is because car sales have fallen by 18-60% with most manufacturers expensive electric cars will not sell well for at least 3 years, so what bank or investor would lend them money now.
Very few banks or investors have any money to invest right now.

Why care about a cheapo iPod dock when most rich people just have entertainment systems installed in their cars.

[Foebea @ Feb 2nd 2009 8:44PM]

Coincidentally the other Tesla had the same issue with funding.

[cubytes @ Feb 2nd 2009 9:00PM]

its the men behind the curtain that continue to perpetuate a profit structure for energy/transportation that benefits their pockets, regardless of economical or environmental costs, or the fact that abundant free clean everlasting energy/transportation would be impossible to monetize yet extremely more beneficial to society, and the argument that the technology inst ready is nonsense, or that hydrogen is the next big thing, is nonsense just trying to apply the same profit structure to a energy source that is more DANGEROUS then gasoline/diesel...GREAT idea!! oh and by the way there is technology available today to solve this energy/economic/transportation crisis the only thing holding it back is....GREEED that and the fact that I think Mercedes or some automaker owns the patents for most of the advanced battery technology needed to really create an electric vehicle capable of competing with carbon spewing internal combustion engines which definitely puts electric cars and any company that wants to manufacture them at an inheirent disadvantage.

[Tom @ Feb 2nd 2009 9:09PM]

Who would want one of them? They have a ton of shortfalls, are expensive as hell, and are on totally unproven technology. No one knows the reliability or longevity of the car.

And may I say also, well thats just super. Now we are bailing out ANOTHER car company. Why can't these companies just take their fail cars and declare bankruptcy.

[Distractedfocus @ Feb 2nd 2009 9:10PM]

Okay so answer me this. The US bails out companies that have had the technology for years to make cars that use less to no gas and they in the interst if profit choose to push these things under the rug and make us desire giant gas guzzlers (which I own and love). But this company that is trying it's best to bring out not only a electric car but one that is cool looking can get the funding it needs? Maybe they need to get some union workers that are like gangsters that whine, cry and threaten until they get what they want.

Hey Tesla I'll be your union boss if when I retire you pay for me to sit on my butt and complain about how I'm not getting what I was promised even though In 30-40yrs tesla might not make any money either

That's all for now

I hope they get some money, if I had any I'd give itbto them but I'm broke as a joke

[wickedpheonix @ Feb 2nd 2009 9:14PM]

Contrary to what you think iEye, rich people would actually rather have something other than an iPod. Just ask all the politicians!

Zing!

[Tom @ Feb 2nd 2009 9:17PM]

Ah, the Dyson strategy.

[tha-don @ Feb 2nd 2009 9:39PM]

"Who would want one of them? "

the same people that ieye is referring to...people who want things just because they can afford them.

do you think people like paris hilton know anything about the cars they drive? now, i'm not tryin to knock her or anything as i have nothin against her...but it's not hard to tell that she's probably not a car person (as in understands them).

[Anton @ Feb 2nd 2009 10:01PM]

iEye just triple-combo failed.

[majortom @ Feb 2nd 2009 10:27PM]

hmm... wonder how much room there is in the "engine" compartment. Small block Chevy..... the rest for the dope.

[marky-b @ Feb 2nd 2009 10:43PM]

are there any reports about how full electric car batteries hold up in colder climates? I would be curious to see.

[Raz @ Feb 3rd 2009 4:21AM]

If they made a more practical electric car they would've done a lot better. Possibly more financial support too. At the end of the day, there are more people willing to buy a daily drive than a weekend sports car.

[Charles R Hamilton @ Feb 3rd 2009 7:37AM]

Where are the Hollywood/Liberal types who preach about the environment? Why don't they put their money where their mouth is and move research into electric cars forward? What? Oh, they don't really want them either? My bad.

[Brian @ Feb 3rd 2009 12:26PM]

do as i say not as i do.





Pretty sure there's a shut down ford factory in minneapolis

[OneLove @ Feb 3rd 2009 10:54AM]

the more i look at that car the uglier it gets.

[maniacprovost @ Feb 3rd 2009 11:01AM]

The Obama haters need to chill. You sound as bad as the Obama supporters.

...The fact that this needs to be posted on a non-political thread about an electric car company in California receiving federal subsidies is beyond me...

[Justin @ Feb 3rd 2009 11:44AM]

HAHAHAHAHHAAHAHHAHAHAHAHAHAHAAHAHAHAHAHAHAHAHAHAAHAHAHAHHAAHAHAHAHAHAHAHAHAAHHAAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAAHAHHAAHAHAH
AHAHHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHHAAHHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHaaaaaa

[Aamir @ Feb 3rd 2009 6:38PM]

Wat the hec...its not that funny!

[fastm3driver @ Feb 4th 2009 3:09PM]

I agree.
If someone is building a car company in the Vally then they are clearly the worst run business.