Tesla Motors Seeks $400 Million of $25 Billion Government Loan Package
By Scott Doggett November 21, 2008
Silicon Valley electric-vehicle maker Tesla Motors has applied for about $400 million of a $25 billion government loan package designed to help automakers produce more efficient vehicles and meet new fuel economy standards.
Diarmuid O'Connell, Tesla's vice president of corporate development, disclosed the amount in an interview with peHUB on Wednesday.
According to O'Connell, Tesla would use the direct loans for two projects: a manufacturing operation to create advanced batteries not just for their cars but for a whole spate of large original equipment manufacturers, and to built the company's planned Model S mass-market sedan.
"The Roadster was meant to be a profitable car, sold to a niche market," he said, referring to Tesla's $109,000 battery-electric zero-emissions sports car (pictured). "But the whole proposition is to drive the cost curve down and the volume curve out with Model S, our own $30,000 car."
Until now, Tesla representatives have said they expect the Model S to sell for $60,000, with a large portion of the price used to pay for the expensive battery pack needed to power the car's electric motor. A third model that's years away from production was to be offered for $30,000.
Of the $400,000 Tesla has applied for, the "battery project will require less than $200 million and the car more than $200 million," O'Connell said.
Because the two products are economically viable and would create up to 1,000 jobs in manufacturing, not to mention construction and maintenance, it would be a miscarriage of justice not to approve them, he said.
Regarding the Detroit automakers, O'Connell said, "If you want to save these behemoth car companies whose business models are failed or failing, that's a policy comment. But if you want to assure the viability of the domestic automotive industry (it would be a mistake to overlook us). Tesla is a shining beacon of what can be done and policymakers should support us fiscally, just as it's supporting these incumbent dinosaurs."
Tesla hopes to secure the low-interest loans by January or February 2009, he said, adding that the manufacturing operation could be set up in a matter of months.
Like General Motors, Ford and Chrysler, Tesla faces hurdles in securing a government loan. The interim rules established by the Department of Energy favor projects involving factories that are at least two decades old and require that companies demonstrate financial viability for the term of the loan (up to 25 years).
O'Connell said he expects Tesla to have significantly shorter loan terms, if approved, than the maximum allowed.
As far as production of the much-anticipated Model S, he said "we've said publicly that we plan to produce the Model S in 2011. But time to money is all important."
"The rush to save (traditional) carmakers could (otherwise) really pervert some terrific, forward-thinking policy and legislative work that's been done to support clean-tech projects like ours," he said.
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