Tesla's impending doom delayed by a $40 mil loan, running on low battery power

[HeilSvenska]

In our inbox, rumor of a staggering blow to one of Silicon Valley's new growth industries: Tesla Motors, a tipster tells us, is laying off 100 people, about half of its staff. CEO Ze'ev Drori is also leaving, he claims. Sad: A few years ago, electric-car enthusiasts talked up the Valley as the new Detroit, home to a vibrant new automotive economy. Last month, Tesla had set plans for a $250 million electric-car factory in San Jose, along with a new headquarters.

But autos are an expensive business, thoroughly dependent on free-flowing credit for their manufacture and sale. Tesla's high-end electrics, a status symbol in good times, now seem excessive; who wants to drive a $109,000 car into a half-empty parking lot? I've called Darryl Siry, Tesla's VP of marketing, but haven't heard back yet. To be clear: I don't know if this layoff rumor is true. I just know that it seems likely.


http://valleywag.com/5063439/tesla-said-to-lay-off-100

[styla21]

*Waits for Nthfinity to say "I told you so" :mrgreen:

[RC45]

Shocking news? Not watt we expected? Does this jolt us to our core? ;)

[philip]

So will the next story be how many people who put down $10,000 deposits on this car are now just creditors.

[nthfinity]

*Waits for Nthfinity to say "I told you so" :mrgreen:

what would I be saying as such about?

I didn't think it would be a sales flop; but rather, people's reasons for buying it were stupid ;)

[HeilSvenska]

Update: Tesla VP Darryl Siry called Wednesday morning to tell us that the number our tipster supplied is "exaggerated" and that the company is "refocusing" to get through "a tough nine months".

[HeilSvenska]

Here's the narrative you're going to hear about Tesla Motors, the Silicon Valley electric-car company which is prepping layoffs and replacing its CEO: The company's founding investor sweeps in to save the day. It is true that Elon Musk, the company's main financial backer, is stepping in to replace CEO Ze'ev Drori, who's staying with the company as vice chairman and a member of the board. But anyone with a sense of history should be very worried at the prospect of Musk taking the wheel.

Musk lucked out twice, with the $300 million of a long-forgotten Internet portal, and the survival, despite his best efforts, of PayPal, the payments site now controlled by eBay. According to Elon Musk, Elon Musk was the driving force behind PayPal during his brief, tumultuous reign as CEO of the payments company. Musk's version of events is a fiction believed by no one else. I know this because I spoke to PayPal insiders regularly while he was CEO, and they told me of chaotic management, boneheaded marketing and technology decisions, and serious turnover under Musk's reign.

That is what Tesla has to look forward to. In some sense, it's already been enduring it since Musk ousted founder Martin Eberhard and replaced him with Drori last year. Musk has been working at the company for several days a week, Darryl Siry, Tesla's VP of marketing, tells me, in an effort to portray Drori's beheading as some kind of smooth transition.

With a parlous economy, Tesla was already in for a bumpy ride. Musk is keeping his second job as CEO of SpaceX, a private rocket company which has seen several botched launches. Add to that the infamous tale of his PayPal-era car crash, and you've got an entrepreneur who's better known for destroying vehicles than building them.

http://valleywag.com/5063557/zeev-drori-out-elon-musk-in-as-tesla-ceo

[10000rpmlover]

I always thought the Tesla was just a gutted Lotus with electric motors and batteries, good looking, fast, but in no way worth 100k, if they were into bringing this to fruition, a lower price tag around low 60s would have been the ticket to sell lots of them, I myself would not think twice about it if I could get one for 60k, but you add 40k more and then taxes, (which I have no idea why you should pay since it is a green car) destination, exotic car liabilitiy, the price out of the door balloons to over 125,000 dollars... if I had 125,000 I will use them on something a lot more appealing than a Lotus exige with an electric motor, I think you can have a ferrari for that price and get a hardon everytime you depress the gas pedal

[pitfield]

Shocking news? Not watt we expected? Does this jolt us to our core? ;)

Hopefully some bright spark will come along and inject new energy into the current re volt ing state of affairs.

[MidEngine4Life]

Does this mean they are not going to build the factory in SJ or the proposed sedan?

[HeilSvenska]

^Everything's been delayed.

[HeilSvenska]

Random sidenote. Under certain circumstances, the Tesla Roadster uses energy while parked.


The Tesla people tell me that when the battery is half-way discharged, and the car is off, and the ESS is cool, then the pump will shut off. Fine. But my average daily drive is less than 60 miles, and I have only driven far enough to drain half the battery 4 times since I got my car three months ago. So, except a few hours on these four occasions, this poor pump has been running 24 hours per day, 7 days a week for three months solid.

I noticed another funny thing: if I charged the car up and let it sit for a few days without driving, I found that the battery was no longer anywhere near full. I guess that the constantly-running coolant pump, along with its support electronics, is draining the battery.

Curious, I installed a real electric meter ahead of my car’s charging station, as noted in a previous blog. This meter simply accumulates a measure of the energy passing through it on the way to charging my car. It is exactly like the power meters that electric companies use to measure what we use for our electric bills.

I’ve had this meter in place for a month now, and the data it has so far collected is revealing.

How much power does this coolant pump draw? To find out, I charged the car up and read the meter. Then I unplugged the car and let it sit for 4 days. Then I charged the car back up again, and read the meter once more to see how much energy the car had consumed those four days of sitting in my garage.
Whoa! The car consumed a whopping 14 kilowatt-hours in four days, just sitting there! Doing the math, the pump draws about 146 watts all day long, all night long, every day. This works out to 1,278 kWh per year. To put this in perspective, a really nice 26-cubic foot side-by-side refrigerator with an ice maker uses only 618 kWh per year, so this pump is the energy-equivalent of two huge refrigerators!

...

Subtracting this wasted energy, the car’s energy consumption at the meter is only 343 watt-hours per mile. A little high, but in the right ballpark. Here is the kicker: 22 percent of the energy consumed by my car happens while my car is parked! Twenty two percent. Imagine that.

...

Maybe this constantly-running pump is an artifact of the temporary drive train in my car. Maybe it will shut off when not driving after Tesla finally installs my 1.5 drive train. I sure hope so, but the Tesla people have told me that it will run the same way with the 1.5 drive train. What a waste that would be – a waste of energy, a waste of batteries, a waste of reliability.


http://teslafounders.wordpress.com/2008/10/12/wasting-energy-like-two-really-nice-refrigerators/

[PaulGT2164]

anyone suprised?
not me to be honest.

[HeilSvenska]

Elon Musk is the new John DeLorean. Crack cocaine, anyone?


The Valley's hottest electric-car maker is running on fumes. Tesla Motors, the brightest hope of Silicon Valley's nascent clean-automotive industry, has only $9 million in the bank, a longtime employee tells us. The company, which recently laid off dozens of employees and announced the closing of its Detroit office, called an all-hands meeting yesterday evening to inform employees of its financial state. What makes the company's low cash balance especially scary, our tipster says, is that the company has taken "multiple tens of millions" of dollars in deposits from customers — anywhere from $5,000 to $60,000 per vehicle — and has only delivered 50 of them. The obvious conclusion: Having already spent its customers' deposits, it may run out of money before it delivers the cars they have paid for. Here's the Tesla insider's report:

"As a longtime employee of Tesla Motors, yesterday was the worst day since i joined Tesla Motors four years ago. A company all-hands meeting was called yesterday evening and a simple six-page company financial model was communicated. I was shocked to learn that we only had ~$9 million in the bank.

The first few hundred cars have been paid full in cash when they booked their vehicles. The reservations following that required from $4,000 to $60,000 of deposit. We have over 1,200 reservations, which manes we've taken multiples of tens of millions of cash from our customers and have spent them all. Meanwhile, we only delivered less than 50 cars.

I actually talked a close friend of mine into putting down $60,000 for a Tesla Roadster. I cannot conscientiously be a bystander anymore and allow my company to deceive the public and defraud our dear customers. Our customers and the general public are the reason Tesla is so loved. The fact that they are being lied to is just wrong."

Owen Thomas, Valleywag

http://valleywag.com/5071621/tesla-motors-has-9-million-in-the-bank-may-not-deliver-cars

[nthfinity]

Seems my semi-inside connection was right when he told me about 10 days ago that Tesla is looking to lay off an even larger section of their workforce.

[SHIZL]

probably spent so much money in court recently cause theres no shortage in people looking to buy this sort of thing

[Vansquish]

I guess it's a good thing that my dad didn't take the job that Tesla offered him about 2 years ago. He and I were pretty excited about the prospect, but he ended up deciding that he was enjoying his retirement too much to go back to work in the auto industry.

[HeilSvenska]

Will $40 million be enough? How is Tesla going to pay of that debt?
Tesla Promised Another $40 Million
By Claire Cain Miller

Tesla Motors, the beleaguered electric car start-up in Silicon Valley, announced Sunday that investors have committed $40 million in financing to help the company out of its latest financial trouble.

The money will come in the form of convertible debt (funny...), loans that can be turned into equity upon a future financing round. Companies that raise convertible debt avoid setting a valuation on the company.

Elon Musk, Tesla’s chief executive, said Sunday Tesla would use the new cash to speed up manufacturing of the Roadster. Tesla has delivered some 50 Roadsters, which sell for $109,000, and is now shipping 10 per week. Another 1,200 have been ordered.

Almost all the current major investors in Tesla will participate in the fundraising round. Tesla has not disclosed which investors are contributing, but past investors include Mr. Musk, who founded PayPal; Larry Page and Sergey Brin, Google’s co-founders; Jeff Skoll, former eBay president and venture firms VantagePoint Venture Partners and Draper Fisher Jurvetson. Tesla has previously raised $146 million.

The vast majority of the commitments were made during a meeting Sunday morning, and a small number of investors are expected to commit within the next few days. The round is expected to close within 30 days.

The money comes during a difficult period for Tesla. On Oct. 15, Mr. Musk, its biggest investor, replaced Ze’ev Drori as chief executive. The company announced it would lay off 87 workers, 24 percent of its staff, and delay production of its Model S sedan. It also shelved plans to raise $100 million, citing the financial crisis.

In an interview with The New York Times on Oct. 24, Mr. Musk said Tesla would raise a smaller round — the financing announced Sunday — and wait for low-interest loans from the Department of Energy, scheduled to arrive in six to eight months. Those loans are reportedly worth around $200 million. He said he plans to raise another $50 million next year.

In response to rumors that Tesla was running out of money, Mr. Musk told Reuters Oct. 31 that the company had $9 million in the bank and that he would personally ensure that it had the cash to deliver all the orders of its battery-powered sports car, the Roadster. He has already invested $55 million in Tesla.