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Transportation Businesses The Almighty Buck

Tesla Motors Shaken Up, Laying Off 491

Posted by kdawson
from the i-want-my-i-want-my dept.
tjstork writes "Tesla Motors, the darling of technorati for its high performance electric car, may be about to go belly up. Venture capital is cut off, layoffs are under way, and construction plans are being stretched out. Elon Musk has ousted the CEO and taken the reins, blaming the global credit crunch."
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Tesla Motors Shaken Up, Laying Off

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  • by Gothmolly (148874) on Friday October 17, 2008 @07:38AM (#25410933)

    If your product works, or at least appears to, and you have a sound plan for getting it to market, where it will be purchased, then SOMEONE will loan you the money. If you're a slick dot-com shop with a foosball table and free soda for everyone, and your product consists of a slick name and spiffy presentations, then not so much.

    • by neokushan (932374) on Friday October 17, 2008 @07:43AM (#25410983)

      Sadly, if Dilbert has taught me anything, it's actually the other way around....

      • by liquidpele (663430) on Friday October 17, 2008 @08:09AM (#25411221) Journal
        It's not just dilbert. If you've ever taken a marketing class, one of the first things they do it show you all the awesome products that failed miserably due to no or poor marketing.

        If you have a good idea, you've got to remember you're only one of a million other people with a good idea - you've got to be able to sell yourself. Not saying that's what happened here, this could simply be them relying to heavily on un-confirmed income, just pointing out that marketing is a necessary part of business.
      • by dnoyeb (547705) on Friday October 17, 2008 @08:39AM (#25411565) Homepage Journal

        You are correct. However, what we have is not so much a credit crunch as we do a "Truth crunch." Peoples ability to use smoke and mirrors to get credit has dried up in an instant. Those without sound, impressive, and extremely plausable plans are being kicked out in the street. Those with marginal plans are probably taking the gas pipe as well.

        People are not buying bullshit anymore. Not because they don't believe the bullshit; they never did. They are not buying it because they can not sell it on to someone else.

        • by machine321 (458769) on Friday October 17, 2008 @08:58AM (#25411773)

          Those with marginal plans are probably taking the gas pipe as well.

          You miss the point, the Tesla doesn't have a gas pipe.

        • Re: (Score:3, Interesting)

          by DriedClexler (814907)

          Well said! Now, if only we could have a "lobbying crunch" so that banks who demand major intervention to avoid the atrocity of having to honor obligations or pay a few tenths of a percent more (annualized!) on interbank loans, would be rightly laughed at.

          It's pretty sad how Tesla Motors has a proven ability to make high-quality, practical (at least once they can get unit costs down) green cars that people want, and it's GM and Ford who are getting the $25 billion in well-below-market-rate loans[1] to do so

          • by jguthrie (57467) <jguthrie@broker[ ].com ['sys' in gap]> on Friday October 17, 2008 @10:29AM (#25413075) Homepage

            Tesla motors has no proven ability to make anything except prototypes. It costs a lot of money to start a car company, because the factories are so expensive, and recouping the tooling costs requires that you amortize that cost over a large production run, which a startup really can't do because they have very little of the supporting infrastructure (dealers, trained mechanics, etc.) in order to be able to sell what they make to a mass audience.

            What that means is that Tesla was always and still remains a long shot at being a viable company. At the present time, all Tesla has is a prototype and a story while GM has a lengthy history of actually building a lot of cars and making a profit by selling them. That is why Tesla has trouble getting financing while GM has less trouble. GM has assets they can sell and lots of momentum behind them. What does Tesla have except a following among the sort of people who regularly visits Slashdot?

            You don't need to imagine a conspiracy to see why this is so, only a view of history. There is a long history of even established auto manufacturers finding it difficult to enter new markets. Remember Renault or Sterling (nee Rolls Royce)? Well, you probably don't, not as manufacturers that sell cars in the United States, anyway. The thing is, they both tried to enter the North American market and both were pretty dismal failures.

            In fact, I remember reading an article praising the virtues of the cars made by Gordon-Keeble, which is a sports car manufacturer that you've probably never heard of. That car was actually put into production to be sold into exactly the market that the Tesla is targeting at about the same real cost, and without requiring the invention of a lot of the new technology that had to be invented for the Tesla. Despite the relative advantages (relative to mass market electric cars, I mean) it enjoyed, it eventually failed because it wasn't viable.

            Most big-ticket manufacturing items are like that. It's tough to start a new company to build aircraft, for example, or ships or trucks. New entries face higher costs and can hope for much lower revenues than their more established competitors, and because of that a little thing like higher interest rates (in the late 1970's, the interest rates on mortgages were in the 20% range) can spell the end of a hopeful company while a larger company has the resources to weather the storm.

            • Re: (Score:3, Informative)

              by DriedClexler (814907)

              I agree with your general point, but: exactly how dependable and well-capitalized do you think GM really is? Here's their financials [yahoo.com]. Summary (Note that some are in negative multiples of their market cap):

              Book value: negative 15 times market cap.
              Earnings (profits): negative 16 times market cap

              Profit margin: -34%
              Current cash: $20 billion
              Amount lost in first two quarters of '08: $18 billion

              Even if Tesla merely had their waiting list to work with, they'd still last longer than GM ... if you ignore GM's lobbyin

      • by MrMickS (568778) on Friday October 17, 2008 @10:47AM (#25413341) Homepage Journal

        Seconded the above. At the time of the dotcom boom my uncle had a new filling machine ready for manufacture. He had orders. He just needed some additional money to build it. He tried banks, VCs, every one he could think of and drew a blank. Yet at the same time VC threw countless money at any proposition that ended '... and its on the internet'.

    • by morgan_greywolf (835522) on Friday October 17, 2008 @07:48AM (#25411029) Homepage Journal

      If your product works, or at least appears to, and you have a sound plan for getting it to market, where it will be purchased, then SOMEONE will loan you the money.

      Not necessarily so. For one thing, Tesla Motors has a long list of pre-orders, IIRC, and I believe they started shipping cars, so there is apparently sufficient demand for their product.

      In this tight credit market, lenders are reluctant to lend money to even stable, established companies. They're not even issuing commercial paper -- which are short-term loans to other banks.

      Venture capital usually doesn't mean that VC or "angel" fronts cash right out of their own bank account or even out of their investment accounts. Many times, they themselves are operating on loans -- if you have a lot of assets, like many VCs, it may be more better to keep your cash locked up and invest borrowed money because the interest rate you pay on the loan may be much cheaper than losing the interest from those investment accounts, especially if they have golden credit.

      And if the VCs with the golden credit aren't getting loans, well, that shows you just how bad the credit market is.

      • Re: (Score:3, Interesting)

        by cayenne8 (626475)
        Crap. The Tesla was the ONE 'green' car of any sort that I would have been interested in. It is the only one that isn't fugly and had great performance numbers, and a decent range for an electric car.

        I had only hoped they'd go another couple years, drop the prices a few thousand, and have service centers in a few more areas near where I like to live.

      • by Savage-Rabbit (308260) on Friday October 17, 2008 @08:40AM (#25411587)

        Not necessarily so. For one thing, Tesla Motors has a long list of pre-orders, IIRC, and I believe they started shipping cars, so there is apparently sufficient demand for their product.

        In this tight credit market, lenders are reluctant to lend money to even stable, established companies. They're not even issuing commercial paper -- which are short-term loans to other banks.

        How many of those pre-orders for their sports-car do you suppose will survive contact with this recession? My guess is not all that many. Of course there are new people that are making their fortune in this Bear market as we speak so perhaps it will even out for Tesla?? One thing Tesla could do in this market is to ally it self with one of the big US car makers, one of the ones that has no kind of experience in making 4-6 seat passenger cars that weigh in at below 5 metric tons and pack less than a 250 hp engine. These companies must be desperate to acquire expertise and engineering talent on how to make the kind of car that will sell in times of recession and toughening environmental legislation. That, IMHO, will be cheap and light electric or plugin-hybrid cars.

        • by lysergic.acid (845423) on Friday October 17, 2008 @09:23AM (#25412123) Homepage

          given the American auto industry's reactionary and disingenuous attitude towards eco-vehicles, i think Tesla would be better off allying itself with a foreign company such as Honda or Toyota, both of which have shown a genuine interest in meeting public demand for environmentally friendly vehicles.

          besides, foreign car companies have been doing much better than American auto companies in recent years. this is at least partly because they're more technologically innovative. Japanese auto makers seem more willing to research and develop new technologies than American car manufacturers. the Tesla Roadster would likely just go the way of the EV1 if put in the hands of Ford or GM.

          • Re: (Score:3, Insightful)

            by _ivy_ivy_ (1081273)

            given the American auto industry's reactionary and disingenuous attitude towards eco-vehicles, i think Tesla would be better off allying itself with a foreign company such as Honda or Toyota, both of which have shown a genuine interest in meeting public demand for environmentally friendly vehicles.

            I'm not sure why they would bother, as Tesla has nothing to offer either Toyota or Honda (or frankly GM or Chrysler).

            Their battery, motor, and chassis technology are all purchased from other firms. Furthermore, all four of the above companies have more developed technologies than Tesla does.

            Japanese auto makers seem more willing to research and develop new technologies than American car manufacturers.

            Actually, you'll find European makes pushing the technology barrier further, at great cost. The US makes typically follow the EU lead, with varying amounts of success. Japanese makers typically implement tried and tru

        • Re: (Score:3, Interesting)

          by Anonymous Coward

          Absolutely . With the $25 billion bailouts for the other Car Manufactures [bloomberg.com] (Slow Loading . . .), we could all have Tesla cars. The big Car Manufacturers should ally themselves with Tesla Motors, or Time to cut the cord.

          quick quote for those that don't wanna wait for that slow as fucking shit to load.

          "Aug. 22 (Bloomberg) -- General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more f

        • Re: (Score:3, Insightful)

          One thing Tesla could do in this market is to ally it self with one of the big US car makers, one of the ones that has no kind of experience in making 4-6 seat passenger cars that weigh in at below 5 metric tons and pack less than a 250 hp engine. These companies must be desperate to acquire expertise and engineering talent on how to make the kind of car that will sell in times of recession and toughening environmental legislation. That, IMHO, will be cheap and light electric or plugin-hybrid cars.

          While I want Tesla to survive, and I want the major car companies to adopt more green engineering talent, I hope that would never happen.

          The reason I love Tesla and the reason their Roadster is so great, is because they are not burdened by all that red tape and ignorant executive banter like the big companies are. They are innovative and in a certain sense reckless, which is what makes them great. This world would be a lot cooler if more people where a little more reckless and willing to go out on a lim

      • by Rick Bentley (988595) on Friday October 17, 2008 @09:45AM (#25412405) Homepage
        VC's don't have a mixed pool of assets from which to operate, nor do they operate on loans in any traditional sense. If you're at a Venture backed company right now, like Tesla, it may be useful to know how the Venture Capital system works:

        First, the people we call "VC's" are really the "General Partners" (GP's). They're the people the companies meet with and the ones who ultimately decide how much to invest in which companies. They'll have a variety of "Associates" or "Venture Partners" around helping out, but the "General Partners" are the ones who decide where the money goes.

        The money itself doesn't come from loans, per say, nor is the money sitting around in some kind of mixed asset class. VC's don't have money laying around in a bank somewhere, at least not a lot of it. The money comes from "Limited Partners" (LP's). The LP's could be very high net worth individuals, they could be pension funds, they could be insurance groups, they could even be "funds of funds" (funds created just to figure out which VC's to put money into). A typical VC will have a mix of all of the above in their LP pool.

        So, if a VC has a "$250 million dollar fund" that doesn't mean that everyone wired over a total of $250MM when the fund was created and that the VC's draw he money down. What it means is that the VC's have $250MM to call on when they make an investment. So, VC-Guys decide "hey let's put $10MM in this startup", they make a "capital call". That's when they tell their LP's to put in their pro-rata share of the $10MM they decided to invest. The LP's move the money into a single account, that account makes the investment on behalf of the Venture Capital group. When they've spent the whole $250MM (or whatever) they have hopefully already raised another fund to start investing from.

        It's that last part that should be scary to any of us dependent upon the Venture Capital market doing its thing. Guess what all those pension fund and insurance groups are doing right now? I'll tell you what they're NOT doing, they're NOT showering VC's with new commitments for new funds. Even worse, some of them are so upside down that some LP's can't make their capital calls. This mean that the VC calls and says "your pro-rata share of the $10MM is $$684k" and the LP says "...er, I don't got it. Sorry". So the VC's suddenly have less money to invest than they thought.

        This results in a lot of VC's sitting on their hands and not investing in big rounds of later stage companies like Tesla (or maybe the company you're at now). This isn't a bad idea for them either, the latter stage financing that they counted on their companies getting (debt based instead of equity based) is largely gone too. So they build a company up to the stage they used to build it up to and there's no one there to take it to the next level. The right thing to do is to get a company to cash-flow positive ASAP, and then worry about growth later when there is outside money available to help you do that. TFA says "the company's goal is to become cash-flow positive in six to nine months", presumably (hopefully?) they have access to enough cash to pull that off.
      • by SecurityGuy (217807) on Friday October 17, 2008 @10:43AM (#25413283)

        VCs do not operate on loans. They do not hoard their own cash because they make more money on the interest than they do in their own investments.

        The money a VC invests is contributed by their investors. Some are seriously rich people, some are institutions (think .edu endowment funds with $100s of millions or $billions). None of it is a loan. If the VC loses all the money, the investors are out the money, period, though they often have a claim on the VC's carry fee (typically 20% of the investment) in that case.

        Commercial paper is also not an interbank loan. It's a short term unsecured loan to finance operating expenses. Non-banks absolutely participate in this market.

    • by baldass_newbie (136609) on Friday October 17, 2008 @07:49AM (#25411043) Homepage Journal

      You really don't understand market economies. There are a lot of great ideas that never reach the market. It isn't enough to have a 'good idea'. Betamax was a 'good idea'. How was their market share?

      • by inviolet (797804) <slashdot@@@ideasmatter...org> on Friday October 17, 2008 @08:48AM (#25411667) Journal

        You really don't understand market economies. There are a lot of great ideas that never reach the market. It isn't enough to have a 'good idea'. Betamax was a 'good idea'. How was their market share?

        Your idea is correct but PLEASE pick a better example to illustrate it with. Betamax was more expensive and had much shorter recording time per tape. For most consumers, these disadvantages very rationally trumped its higher video resolution.

    • by theaveng (1243528) on Friday October 17, 2008 @07:50AM (#25411049)

      During the Great Depression lots of people had great products (cars, houses, radios), but since one-quarter of people were jobless, almost nobody was buying these products.

      About the only 1930s industry that profited was the movie industry, mainly because people wanted to escape reality, even if only for three hours.

      • Re: (Score:3, Informative)

        by Anonymous Coward

        Actually, the military industry sustained growth. In fact, even when the US was an autarchy between WW1 and WW2 the economy grew.

        Two things to remember: a) the rest of the world was in the great depression too, b) engaging in a huge war got us out by spurring heavy industry to create jobs and produce war machines, bombs, and bullets.

        • Re: (Score:3, Interesting)

          by Sancho (17056) *

          Something I've never understood is how the government got the money to pay for the war machines, bombs, and bullets. I mean, you hear all the time how that got us out of the depression, but it just doesn't add up.

          Was the government printing money at that point? Is that what did it? Because overprinting money is generally not a good thing, and is arguably one of the reasons we're having problems right now.

          • by Free the Cowards (1280296) on Friday October 17, 2008 @08:56AM (#25411749)

            "The war saved the economy" is one of those fascinating "facts" that gets repeated constantly but which simply doesn't hold up if you look at it closely.

            Consider a similar situation: the government places orders for all sorts of war supplies. Tanks, planes, food, ammo, etc. They all get loaded up on trucks and trains and taken to sea ports. At the ports they are loaded onto cargo ships. Once full, the ships leave port, sail out to sea, and shove everything into the ocean.

            And just for good measure, a large fraction of the ships themselves are also sunk.

            The remaining ships come back for more, and the shipyards build replacements for the sunken ships.

            Economically, this situation is identical to what you experience during a major overseas war such as WWII. But somehow, shoving thousands of tanks and planes into the ocean, and tons of food and ammunition right behind it, doesn't seem like a net gain. In fact, it seems an awful lot like a net loss.

            Maybe extra government spending on the war stimulated the economy. But nothing about that stimulus required a war, and indeed without the war it could have been done much better and less wastefully.

            • by Chris Burke (6130) on Friday October 17, 2008 @09:22AM (#25412115) Homepage

              Consider a similar situation: the government places orders for all sorts of war supplies. Tanks, planes, food, ammo, etc. They all get loaded up on trucks and trains and taken to sea ports. At the ports they are loaded onto cargo ships. Once full, the ships leave port, sail out to sea, and shove everything into the ocean.

              And just for good measure, a large fraction of the ships themselves are also sunk.

              Don't forget the part where they take a few hundred thousand young men onto those ships and shove them into the ocean as well... I'm sure that stimulated the economy... At least it fixed any unemployment problem we had...

            • by Thelasko (1196535) on Friday October 17, 2008 @10:03AM (#25412645) Journal

              Maybe extra government spending on the war stimulated the economy. But nothing about that stimulus required a war, and indeed without the war it could have been done much better and less wastefully.

              You forget that economics has a psychological aspect to it. During the depression, people were fearful to spend and loan out money. There was a sentiment of distrust among people. The war changed that, it united people to a common goal. Unions ended strikes, and people began to loan out money in the form of war bonds. [wikipedia.org] The money from those bonds were given/loaned to companies to hire and train more people. These people could then afford to buy bonds, completing the economic cycle.

              Our economy is a closed loop system that works because people believe in it. Without confidence in the system, it fails. This is why surveys of consumer confidence [wikipedia.org] are made, and the results of which are used by the Federal Reserve to determine its policies.

          • Re: (Score:3, Insightful)

            by sunking2 (521698)

            Bonds. People use there savings to help fund the government to fund the war.

            While I'm not sure of the accuracy, this is really the underlying story of Flags of Our Fathers. In the movie at least Bond purchases had dried up so much that the war was on the brink of not being fundable and peace may have had to be negotiated. Thus the whirl wind tour of heros to drum up public support. Accurate or not, I don't know, but basis is valid

            Also, since we aren't with a gold standard we just print more money and defici

          • by BlueGecko (109058) <benjamin,pollack&gmail,com> on Friday October 17, 2008 @09:18AM (#25412047) Homepage

            Some deficit spending...and a 94% tax rate. Seriously [truthandpolitics.org].

            Look: I'm extremely fiscally conservative. But even I'm more than willing to grant that there's a definite balance point between anarchic free-market capitalism and nanny-state socialism: putting aside morals, too much wealth centralized in the hands of too few kills the economy because no one can afford to buy anything, while too much wealth distribution kills the economy because no one's motivated to innovate.

            During WWII, we had extremely aggressive taxes to pay for a massive war, where those taxes are going to local industries, thereby supplying tons of previously unemployed laborers jobs. That's effectively labor-based socialism. At the end of the war, Europe had bombed their industry to oblivion, while ours had just been rebuilt, so we were in a wonderful position to get rich--if we had buyers. Critically, the Marshal Plan basically amounted to international socialism, giving Europe money with which to buy American goods. They then used those goods to rebuild their own economies, giving them new income, with which to purchase American goods legitimately.

            So, in summary: WWII caused domestic socialistic policies that got us out of the Depression, and the Cold War caused international socialistic policies that kept us out of it.

            Can we all agree now that maybe a little wealth distribution isn't necessarily a bad thing 100% of the time?

            • by SailorBob (146385) on Friday October 17, 2008 @10:32AM (#25413115) Homepage Journal
              This parable can probably also be applied to any forced change in resource allocation, such as government redistribution of wealth.

              Parable of the Broken Window [wikipedia.org]

              The parable describes a shopkeeper whose window is broken by a little boy. Everyone sympathizes with the man whose window was broken, but pretty soon they start to suggest that the broken window makes work for the glazier, who will then buy bread, benefiting the baker, who will then buy shoes, benefiting the cobbler, etc. Finally, the onlookers conclude that the little boy was not guilty of vandalism; instead he was a public benefactor, creating economic benefits for everyone in town.

              Bastiat's original parable of the broken window went like this:

              Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation - "It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

              Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

              Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade - that it encourages that trade to the amount of six francs - I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

              But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

              It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

              The fallacy of the onlookers' argument is that they considered only the benefits of purchasing a new window, but they ignored the cost to the shopkeeper. As the shopkeeper was forced to spend his money on a new window, he could not spend it on something else. For example, the shopkeeper might have preferred to spend the money on bread and shoes for himself, but now cannot so enrich the baker and cobbler because he must fix his window.

              Thus, the child did not bring any net benefit to the town. Instead, he made the town poorer by at least the value of one window, if not more. His actions benefited the glazier, but at the expense not only of the shopkeeper, but the baker and cobbler as well.

    • by mabhatter654 (561290) on Friday October 17, 2008 @07:54AM (#25411073)

      their product takes time to work out the lumps because their pioneering. The lure of the product was that Tesla was doing this because other companies wouldn't and someday that'd be big.

      In the last few weeks the feds kicked in $25 Billion (with a B) to the plain-ole auto companies to compete with them. That's more funding than Tesla will ever get even if they made a profit ... VCs are jumping ship.

    • by digitalsolo (1175321) on Friday October 17, 2008 @08:20AM (#25411327) Homepage
      My company has free soda.

      Luckily we have a Ping Pong table instead of foosball, or we'd be totally boned.
    • by sjbe (173966) on Friday October 17, 2008 @09:50AM (#25412465)

      If your product works, or at least appears to, and you have a sound plan for getting it to market, where it will be purchased, then SOMEONE will loan you the money.

      That is not even remotely true. I've tried to raise money and fairly often work with bankers and VCs. Having a good product and a good plan are rarely enough by themselves. A very significant part of getting capital is what the lender thinks of you, the borrower, personally. Your character, how you present yourself and your track record of creating successful ventures usually matter more than the particulars of your product and plan.

      Lending is a relationship business and anyone who has tried to raise money (like me) or lent money will tell you so. Lenders don't really invest in business plans - though business plans are important; what they really invest in is you, the borrower. If you are some random person who is not known the the lender and you don't have a track record of successful ventures, you are going to have a MUCH harder time raising money.

      Furthermore in a market like right now formal lending institutions sometimes simply won't lend to anyone - regardless of their credit worthiness. The banks and investment houses are afraid of losing their capital because they can't predict who is safe to lend to. They don't know who they can reliably lend to because there is so little transparency in these exotic securities we've all become far to familiar with recently. Credit markets work on confidence. In 1999 it was extremely easy to raise money, in 2002 and right now not so much. There is always money being lent but that doesn't mean everyone with a decent plan can get adequate funding.

    • Re: (Score:3, Interesting)

      by hey! (33014)

      If your product works, or at least appears to, and you have a sound plan for getting it to market, where it will be purchased, then SOMEONE will loan you the money.

      Actually, that not being true could be one definition of a "credit crisis".

      I will now perform for your amazement, my amazing one sentence and one paragraph explanations of "the credit crisis". Please note that these do not constitute economic advice nor advice on treasury policy, they are intended strictly for entertainment purposes only.

      One sentence explanation:

      Investors sometimes choose to ignore opportunities for what looks like relatively certain profit because what is rational economical behavior on th

    • So, where did you get your data for that conclusion? Old essays by William F. Buckley and George Bush, Sr.?

      Speaking as somebody who *has* tried to line up funding and as a former workflow and operations consultant to startups, you're talking out your ass, especially in the current market. I've seen dozens of companies awash with money who had no working product nor credible plan to make one, an executive team who couldn't even spell the names of any of the engineering societies, and very expensive offices
  • There is limited desire for the first generation of a car that costs $110,000.
    • Correction: The car Tesla Motors has for sale now costs $109,000.

      The L.A. Times article has more detail: Tesla Motors hits the brakes amid credit crisis [latimes.com].
      • Re: (Score:3, Funny)

        Correction: The car Tesla Motors has for sale now costs $109,000.

        Oh, well, that's so much cheaper! Maybe I can afford one now. /me checks wallet

        Nope. I seem to me about $108,999 short.

        Damn.

    • by FileNotFound (85933) on Friday October 17, 2008 @08:03AM (#25411159) Homepage Journal

      Yes...the demand is so very limited that they have preorders for every single car that's scheduled to roll off the assembly line till 2009.

      Demand is not the issue at all.

      The issue is that they cannot get loans. This means that their only way to survive is to become profitable now as opposed to take out loans that they'd fully be able to repay later.

    • Re: (Score:3, Insightful)

      by Yvanhoe (564877)
      This is a *sport* car. That can go to 60 MPH in less time than most Ferrarris and Porsches. Your regular telecommuter does not need this, your average eco-yuppie will love it.

      Unrelated : Slashdot tells me I was to concise in my post and that I must wait 5 more minutes so I guess it is okay that I add garbage at the end of this post. Really, what purpose does this 'one post per 5 minutes' rule is supposed to bring ? Discussions on an article can only occur during its 3-4 hours of visibility, and usually
  • Misleading summary (Score:5, Informative)

    by passthecrackpipe (598773) * <passthecrackpipe ... m ['hot' in gap]> on Friday October 17, 2008 @07:40AM (#25410951)
    Tesla isn't going belly up. They are waiting with further developing their Sedan until they can get a cheaper loan. next year or so.
    • They are waiting with further developing their Sedan until they can get a cheaper loan. next year or so. I hope you are correct. I always hate to see a new venture go down.
    • by fnj (64210) on Friday October 17, 2008 @09:31AM (#25412265)

      Tesla isn't going belly up. They are waiting with further developing their Sedan until they can get a cheaper loan. next year or so.

      Ha ha ha. And the economy is basically sound. Elvis and Hoffa are alive. Oswald just came up with the idea to kill Kennedy out of the blue. Bush's advisers are competent. The Taliban are going to realize the error of their ways. Iraq as a muslim state is going to be so much more friendly and peaceful than the secular dictatorship was. The billionaire's bailout will make everything all better. Sending all of our industry overseas will improve our economy. Obama is the Messiah. Things are really going to change now. Duke Nukem Forever is almost ready. Vista was a great achievement and everybody loves it.

  • by that this is not und (1026860) on Friday October 17, 2008 @07:41AM (#25410963)

    Maybe, like Nickolai Tesla, they were just destined to have a great beginning but go nuts toward mid life.

    • Re: (Score:2, Redundant)

      by neokushan (932374)

      The thing that intrigues me about Tesla, to this day, is that from his very humble beginnings, everyone always thought he was nuts and thinking about the impossible. From the science teacher that told him that his AC/DC converter was as viable as a "Perpetual motion" machine, to Edison himself who claimed he was dangerous and slightly insane, he still kept proving them wrong and was able to push hard enough to show that he was actually right the whole time.
      It was only later, when he was much older that peop

      • by Aladrin (926209)

        I think you hit the nail on the head, here. I hear people say 'It's impossible!' all the time and think of things like this. Even 'perpetual motion machines' (which I understand why they are impossible) should not stop being someone's dream because they may find a way to create something that's close enough as doesn't matter, or serves some other useful function.

        They should, however, stop professing to have made one until they can actually prove it and stand the scrutiny... That may have been Tesla's mis

    • by thermian (1267986) on Friday October 17, 2008 @07:48AM (#25411033)

      Tesla was OK I guess, but those lightening towers he built for the Russians used to tear up my tanks something rotten, the barstard.

    • by fnj (64210) on Friday October 17, 2008 @10:02AM (#25412619)

      Maybe, like Nickolai Tesla, they were just destined to have a great beginning but go nuts toward mid life.

      Nikola Tesla had a uniquely staggering natural insight. He was almost single handedly responsible for AC and polyphase power systems, and the AC motor; and made great contributions to ballistics, radio, radar, robotics, remote control, nuclear physics.

      Tesla was a millionaire at 40 (when a million dollars was an astounding amount of wealth), and would have been the world's first billionaire had he not torn up his contract with Westinghouse because of his social conscience.

      I hardly think Tesla Motors can be compared with Nikola Tesla, but at least they recognize his greatness, and the fact that he invented a key part of the technology that enabled their dream.

  • Irony (Score:5, Insightful)

    by Lil'wombat (233322) on Friday October 17, 2008 @07:41AM (#25410965)

    GM losing billions and getting loans to retool for
    Greener, more efficient vehicles like hybrids and while the real innovators go under.

    • Re:Irony (Score:5, Interesting)

      by Ogive17 (691899) on Friday October 17, 2008 @07:50AM (#25411051)
      Tesla Motors struggling doesn't affect millions of Americans.

      I work for Honda and I don't want to see GM or Ford go belly up because it would hurt us as well as Toyota. We've already had to deal with numerous suppliers shutting down due to GM/Ford plant closures. A good portion of our suppliers built parts for multiple OEMs. When the bigger ones go belly up, the ripple is felt throughout the supply chain.

      GM or Ford going out of business might give us more sales, but considering how many suppliers would shut down, our business would suffer immensely. That doesn't even consider the number of people who lose their job and no longer afford buying the car.

      I don't like the bail out, the Detroit automakers had poor vision and now are suffering for it, but it's bad for the industry if they don't survive.
      • Re:Irony (Score:5, Informative)

        by FileNotFound (85933) on Friday October 17, 2008 @08:11AM (#25411239) Homepage Journal

        Ford and GM going belly up wouldn't magically cause them and their billions of assets, be it physical or intellectual to disappear.

        What you'd have is companies breaking away from the main brand and being sold off. Ford would let Mazda go, GM Saab and so on.

        What would die would be the GM/Ford brand names along with the pension plans and other UAW union benefits. Which frankly is a good thing for the US auto industry in the long run.

        • Great idea (Score:5, Insightful)

          by copponex (13876) on Friday October 17, 2008 @09:01AM (#25411819) Homepage

          What would die would be the GM/Ford brand names along with the pension plans and other UAW union benefits. Which frankly is a good thing for the US auto industry in the long run.

          Yes, because the wage declines experienced in America due to competition for low paying jobs with no benefits leads to more low paying jobs with no benefits.

          Germany still manages to have strong unions, competitive products, and they actually pay their pensions, because they're required to by law. The only people that benefit from union busting are the CEOs that make 300 times their average worker's salary, versus European CEOs who make about 35 times more than their average worker.

          If you want to know which policy is more valuable, take a look at the Euro and the Pound versus the Dollar. This anti-Socialism nonsense is based in a fantasy world where facts are non-existent, and anecdotes trump reality.

          • Re: (Score:3, Informative)

            by Luyseyal (3154)

            But you have to put up with higher unemployment rates [bls.gov].

            -l

            • by copponex (13876) on Friday October 17, 2008 @09:58AM (#25412559) Homepage

              Comparing the whole of Germany isn't quite the same. West Germany has comparable, and even lower unemployment rates than the United States, but the leftovers of East German policies are still affecting the economy as a whole. Government subsidies are still flowing East, just as the Northeast and West coast pay for the infrastructure of the rest of our country.

              Even with a former communist bloc attached to it, Germany has lower poverty levels, better education, and equal access to health care. Oh, and when polled, the Germans are far more satisfied with their health care than Americans are with their own, despite paying less than half of what we pay.

          • Everything you said in your post is correct except for one glaring oversight.

            If you want to know which policy is more valuable, take a look at the Euro and the Pound versus the Dollar. This anti-Socialism nonsense is based in a fantasy world where facts are non-existent, and anecdotes trump reality.


            You sir, haven't the slightest clue what you are talking about. Currency exchange rates are set by a whole variety of different criteria. It has nothing to do with socialism, success, or any other such
      • Re:Irony (Score:4, Insightful)

        by Yvanhoe (564877) on Friday October 17, 2008 @08:20AM (#25411325) Journal
        Being ready to let new innovative businesses die to let old, obsolete businesses to live, whatever the social cost, is a bad policy. Tesla Motors could become the GM of the future. Or both could go bankrupt.
    • Re: (Score:2, Interesting)

      by captbob2002 (411323)

      If GM lasts long enough to build it there is real innovation in the Chevrolet Volt [wikipedia.org].

      Tesla is interesting in its way, but it is not a car that many could hope to afford. Perhaps the best thing Tesla Motors has done is convince Bob Lutz that GM could/should make a real effort at at practical electric car.

      Additional Volt information [gm-volt.com] from a fan of the project.

    • Re: (Score:3, Informative)

      by MtViewGuy (197597)

      Interestingly, I see Ford better surviving in this new, leaner climate for auto sales.

      The reason is simple: Ford already has a product line (the European Ford division) that can within a few years be the backbone of most of their sales in the USA. We're stating to see the fruits of that change now: the 4th-generation Ford Fiesta will arrive in the USA around January 2010, the third-generation Ford Focus will arrive in the USA probably summer 2010, and Ford has begun work to essentially merge the European Mo

    • Re:Irony (Score:5, Insightful)

      by Lord Ender (156273) on Friday October 17, 2008 @08:58AM (#25411777) Homepage

      The problem is that GM is bankrupt, but it also has made a fantastic amount of pension promises without funding them. At some point, GM will be crushed under that weight, and there will be an army of angry pensioners suddenly thrust into poverty. They will blame whichever government is in power. This is a disaster for the politicians seated at the time.

      As a solution, our friendly government has decided to loan ever-increasing amounts of our tax money to GM in hopes of prolonging it's life until their terms are up.

      Tesla may be exactly what America needs, but it isn't a political issue, so it isn't going to get free loans from the taxpayers.

    • Re: (Score:3, Informative)

      by LWATCDR (28044)

      People keep saying how innovative Tesla is/was?
      But the Tesla roadster was nothing but an electric race car.. It is very expensive and not all that practical. They have not even shipped any to customers yet. We have no idea if they can even make a profit at $110,000 each.
      Toyota, Ford, Honda, and GM are shipping hybrids now. The Volt from GM and the new all electric from Chrysler are both pretty innovative and best of all probably producible.

      The Tesla Roadster is at best an expensive exotic toy. At wost an un

      • Re: (Score:3, Interesting)

        by Chris Burke (6130)

        Frankly I consider the Roadster a more likely success than the Volt, at least if they can survive long enough to start shipping cars in reasonable volume.

        The Roadster costs $100,000 mostly because it stacks enough LiIon batteries to provide the current for a 0-60 time to rival any other sports car, and to give it a 250 mile range. $100k is not very expensive for a sports car. It blows away Ferraris in the same price range.

        The Volt on the other hand is only a great idea if it gives you enough battery power

  • by bugeaterr (836984) on Friday October 17, 2008 @07:45AM (#25410995)

    By my reckoning, ever since "Five Man Acoustical Jam".

  • by Jodka (520060) on Friday October 17, 2008 @07:50AM (#25411053)

    Wil Shipley [wikipedia.org] of Delicious Monster [delicious-monster.com] test drove a Tesla and wrote about it in his blog. [wilshipley.com]

    Here is part of what he had to say about:

    It's crazy-fast. It handles like a jet fighter. It gets the equivalent of about 140 mpg. It has no gears. It requires almost no maintenance.e It's gorgeous. It's whisper-quiet. And, in Seattle, runs off hydro power.

  • Tesla was building something amazing. It is unfortunate to see a company making something so cutting edge have to scale back or even fold. Especially when it isn't because of their own fault (or is it, and they are using this as an excuse?) These types of companies are the future, and the world loses a lot when these types of companies don't make it.

    • by Knuckles (8964) <knucklesNO@SPAMdantian.org> on Friday October 17, 2008 @08:18AM (#25411297)

      Tesla was building something amazing.

      A Lotus with lots of mobile phone batteries thrown in that would become an environmental nightmare if it caught on in the mass market. Goodbye Tesla.

      • Re: (Score:3, Insightful)

        by Chris Burke (6130)

        environmental nightmare

        So... not familiar with the environmental risks of LiIon batteries, eh? Hint: The whole battery pack is less of a "nightmare" than the 12V lead-acid battery your car contains as a mere auxiliary to the environmental problems it causes in normal operation.

    • Re: (Score:3, Insightful)

      by LWATCDR (28044)

      Tesla is nothing but a exotic car company. They build toys for the rich and often go out of business unless some real car company buys them for a halo brand.
      Yea Tesla was cool but not really important. What bothers me more is I fear that GM will build the Volt and nobody will buy it That will be a real blow.

      • Re: (Score:3, Insightful)

        by MobyDisk (75490)

        Is this the same Slashdot who jumps on everyone as soon as they someone says that NASA never did anything useful? How about the gerabox that Tesla developed that was unlike what any other manufacturer did? Or the engineering involved in making an electric car with the range this had? Or how much it is pushing the demand and money going into battery development? A lot of good things come out of Tesla.

        Lots of new technology starts out as toys for the rich. Don't knock them for being that. Tesla is doing

  • Fired the CEO (Score:3, Interesting)

    by tompaulco (629533) on Friday October 17, 2008 @08:29AM (#25411437) Homepage Journal
    Elon Musk has ousted the CEO and taken the reins, blaming the global credit crunch.
    That's odd. Usually when a CEO totally fscks up a company, they give him huge bonuses and lay off more technical workers. In this case, they are admitting that it is due to the global credit crunch, which I am pretty sure is not the CEOs fault, and yet they are firing him anyway.
    Bizarre.
  • by Ralph Spoilsport (673134) on Friday October 17, 2008 @09:28AM (#25412221) Journal
    we don't need a few hundred electric cars that go 150mph. We need a few million electric vehicles that can go 40mph. [youtube.com]

    RS

    • Re: (Score:3, Interesting)

      by nasch (598556)

      Are those goals mutually exclusive?

  • by bigredradio (631970) on Friday October 17, 2008 @11:12AM (#25413791) Homepage Journal
    Wow, with all this talk of layoffs, Tesla is really starting to look like a REAL American car company. Detroit would be proud!
  • Woosh... (Score:5, Insightful)

    by Animats (122034) on Friday October 17, 2008 @11:48AM (#25414339) Homepage

    The Tesla is a great idea, but they tried too hard to make it really fast. The original idea was to have an air-cooled electric motor and a one-speed transmission. But they couldn't quite get the top speed they wanted, which was somewhere above 125. So they went to a two-speed transmission, and the first transmissions wore out rapidly. Then they went back to a one-speed transmission, and tried water-cooling the motor so they could pour more current into it. This ran up their costs, delayed shipping of the product, and made the thing more complex. If they'd settle for a top speed of 110 MPH, the thing would be much easier. It would still have the acceleration.

    More fundamentally, "bling" is dead. It died about two weeks ago. The luxury industry is terrified right now. It's very clear that we're in for a long, worldwide recession. Expensive status symbols are so over.

    I see Tesla cars on the road regularly. But that's because I live near the Silicon Valley dealership. I think they demo the thing by driving past my house and out to Canada Road near Crystal Springs Reservoir, which has a nice scenic route with little traffic where they can speed. I just hope they don't wipe out a bicyclist out there.

    They do "woosh" by without engine noise, as advertised.

  • by istartedi (132515) on Friday October 17, 2008 @01:37PM (#25415817) Journal

    Which would you rather own, 5% of Hyundai Motors, or 50% of Rolls Royce. I've confronted this model in software startups too. Early stage, people love to do "4 legged sales for six figures". I think maybe it's easier to sell to VCs. I've never been with a company that had a good plan to move downscale and increase volume, where MOST OF THE MONEY IS.

    The smarter money is on Aptera. It's got roughly a $30,000 price tag. That's still a bit more than a low-end economy car; but the Apteras are sleek and different looking. At least a few people will want to have their "space ship" looking car in the driveway, and when the neighbors find out it gets 150mpg, the looks won't matter. Of course, a lot of this depends on how gas prices move. I hate to say this, but if we have just one year of sub $2 gas, people will forget about mileage until the next crisis.

    I was tempted to put down my $500 and reserve an Aptera; but given the track record of these companies I decided not to do that.

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