TESLA’S (MORTAL) COIL by Scott Budman
If you’ve ever sat inside a Tesla sportscar, you know it feels great.
It’s sexy. It’s fast. It’s super expensive. And, perhaps best of all, it’s green.
It’s the kind of car the kid in the 280-ZX commercials of my youth would look at and say, wistfully, “someday.”
But Tesla’s timing is also proving to be exquisitely bad…and it may kill off one of the Silicon Valley’s better ideas. The car itself may be the next DeLorean. Great-looking, unusual, trend-setting .. and ultimately, a kitschy collector’s item. Already, ValleyWag is calling Tesla CEO Elon Musk the next Preston Tucker.
But back to timing. When the gas station across the street from the Menlo Park dealership offered up fuel for $4.75 a gallon, it looked like the Tesla roadster’s six-figure price tag would pay for itself in a matter of a few years. And when that same six-figure price tag was made palatable by a less expensive sedan version, to come out of San Jose, no less, it looked like a car company for everyone.
Last year, San Jose’s Mayor Chuck Reed, in a ride that is beginning to resemble Mike Dukakis in his tank, proudly announced that his city would be the manufacturing site for the next-generation Tesla . . .and with lots of new jobs to boot.
Fast forward to now. About 100 people (Google’s founder included) have ponied up and are driving the (still beautiful & green) sportscars. Many others are on the waiting list – but in today’s economy, it’s a good question whether those cars will ever bought & paid for. Tesla even admits that despite the nosebleed price, it’s still losing money on each car that drives off the lot.
And speaking of money, Tesla itself is running out of it. Plans for the sedan have been put off (again), the big new San Jose assembly plant is being put on hold — and San Jose (and Mayor Reed) is looking like the groom left at the altar.
Maybe it’s just not good business for a start-up to charge $109,000 for its initial product. Maybe Tesla got in way over its head. Throw in some really, really bad luck (a crippled economy, with the auto industry doing even worse), and you have the makings not of a planet-saving car company, but of a good idea done badly, with a few satisfied customers, and a whole lot of burned investors.
I’d love to see Telsa succeed .. part of it reminds me of what the Valley does so well, part of it is that the sexy little car is exactly what our planet needs. But I wouldn’t bet on Tesla, at least not in the short term. For a variety of reasons, it’s no longer giving the people what they want at a price they can afford . . . and that’s just not good business.
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1 comment:
This article has numerous inaccuracies, which may be understandable given that the author never called or e-mailed me for facts. I'm more than happy to let the author pontificate on the state of Tesla or the auto industry, but let's do it from a position of objective knowledge, please.
I'll concentrate on the biggest error -- the notion that the Model S is delayed. It's not. One of the reasons the company opted not to build a Model S assembly plant on a greenfield site in San Jose was precisely because it wasn't the most expedient or cost-effective option to get the car on the road by 2011 as planned. The car will be unveiled next month -- a working prototype, not just a static concept car.
Also, Tesla has never admitted "it’s still losing money on each car that drives off the lot." Much was made in the blogosphere a few weeks ago, quoting some of the *historical* costs of the Roadster dating back to 2007, when the cost indeed exceeded the $92,000 price tags that some customers paid. But the company, which remains privately held, is expected to become profitable this summer -- and I'll leave it to objective readers to figure out whether that could be possible if the company were losing money on every car sold.
Thanks for reading.
Rachel Konrad
Senior Communication Manager
Tesla Motors Inc.
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