Tesla Modifying Ambitious Factory Plans As Competition for Federal $$ Grows
By John O'Dell January 29, 2009
By John O'Dell, Senior Editor
Tesla Motors' hopes for a $400 million-plus headquarters, electric-car assembly and battery manufacturing complex in the heart of California's Silicon Valley seem to fading.
The company, which first floated the idea in September, when it thought it could raise the money though private investment, became dependent on federal low-cost loan guarantees when the global economy began melting down and venture funding evaporated.
"We abandoned venture capital and instead focused on ... federal loans," said Tesla spokeswoman Rachel Konrad.
But after applying for a federal loan guarantee from the government's $25 billion auto industry green-tech fund, Tesla discovered that the ground rules gave preference to plans that would rehabilitate existing factories rather than to those, such as Tesla's, that called for new construction.
As a result, Konrad told Green Car Advisor, the company has notified the feds that it is quite willing to use the proceeds of federal loans to acquire and retrofit old computer chip facilities in the San Fransisco Bay area (which includes the Silicon Valley) and abandoned aerospace plants in Southern California.
"We are committed to [staying in] California, Konrad said, and we want to keep our headquarters and the battery facility together" in the same complex, preferably in the Silicon Valley near Stanford University and UC Berkeley.
That's because the kind of engineering talent the company needs to pursue its goal of becoming a major EV battery and electronic management systems developer and supplier abounds in that region.
But an auto assembly plant could be located in one of the many empty or underutilized aerospace industry plans in the Los Angeles and Long Beach areas, Konrad said.
Making things a bit easier, Tesla hopes, is that the company has applied for separate loans for its facilities: $250 million for the auto plant, which would be used to build the $80,000 "Model S" electric sedan the company is planning for a 2011 rollout; and $150 million for the battery plant.
Separate loans would make it easier to develop the two facilities in different areas of the state.
Funds for a new corporate headquarters to sit near or alongside the battery plant would come from operating capital, said Konrad.
Tesla still faces a lot of competition.
Some 75 applications have been received by the Energy Department, which is administering the automotive advanced technology loan program. They collectively seek $38 billion, or 52 percent more than congress has authorized.
The Shrinking Three (formerly Big Three) domestic automakers alone have asked for $22 billion, or 90 percent of the pot, at last count.
Tesla, which has hopes of parlaying its limited production, $109,000 electric roadster (left) into a major EV development, manufacturing and retailing business, has said that growth plans beyond the roadster are contingent now on the government loans because of the sad state of the private capital markets.
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