Tesla CEO Details Delaying Raising Funds and the Model S

“Today Tesla is in pretty good shape, actually,” says Tesla Chairman and CEO Elon Musk this morning to an audience at the Dow Jones Alternative Energy Conference in Redwood City, Calif., less than one week after announcing layoffs, a delay of the company’s next-generation vehicle, and that he would be taking over as CEO.
Musk has made himself personally responsible for the success of Tesla — with a $55 million investment, taking over daily management, and personally standing behind delivery of cars — so he doesn’t have much choice but to be optimistic, explaining Tesla is in a lot better place than last year, when he says it was in “terrible shape.” We have the hottest car on earth — at the Academy Awards there will be a line of Teslas out front, Musk said.
Musk did give a few more details about what happened over the weeks prior to his recent decision. To move into working on the Model S, Musk says Tesla would have had to raise $100 million. Just 4 to 6 weeks before Musk’s decision, Tesla was in the process of actively fundraising and was talking to several investment entities. Then the market went into a freefall, says Musk, and the investors the company was talking to kept pushing back investment terms. Tesla could have done a deal — it would have just been under horrible terms, Musk says.

Now, Tesla is waiting for a loan guarantee to come from the Department of Energy, which is contingent on Tesla completing an environmental impact assessment (EIA) of its plant in San Jose. Tesla hopes to finish the EIA by second quarter 2009, which would delay the next-gen Model S by about six months, Musk estimates. As anyone who has been involved in these types of assessments knows, EIAs can take a very long time, and Musk by his own admission tends to be optimistic about dates and deliveries. But he says he has always delivered in the end.
Delaying the Model S and cutting staff means Tesla is focusing on its current technology, the Roadster, and on becoming cash positive. One technology Musk says the company is working on is a charger that can charge a battery in 45 minutes. That is one way the company can help overcome the “range issue” (current battery technology can only go so far on a single charge) for electric vehicles. Other ways to attack the range shortfall will be a swappable battery and building an extended-range vehicle that can travel 300 miles on a single charge.
Tesla’s restructuring isn’t surprising, but we think it sends a major signal to the cleantech industry — the green party is over, at least temporarily. For Musk, it’s a time to put his head down and try to meet those dates. And if you appreciate optimism, Musk has it in spades.