Tesla Motors Shaken Up, Laying Off 491
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."
Credit crunch my butt (Score:4, Insightful)
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.
Re:Credit crunch my butt (Score:5, Insightful)
Sadly, if Dilbert has taught me anything, it's actually the other way around....
Comment removed (Score:5, Insightful)
Re:Credit crunch my butt (Score:5, Funny)
Re: (Score:3, Insightful)
that's a cute joke, but really, the first thing they tell you in any class is why the subject matters and what you'll get out of it.
Re:Credit crunch my butt (Score:5, Funny)
Hey look! With this new fangled "HTML" thing we can make clickable words!
http://xkcd.com/125/ [xkcd.com]
Re:Credit crunch my butt (Score:4, Funny)
Re: (Score:3, Interesting)
Re:Credit crunch my butt (Score:5, Interesting)
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.
Re:Credit crunch my butt (Score:5, Funny)
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)
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
Re:Credit crunch my butt (Score:5, Insightful)
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)
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
Re:Credit crunch my butt (Score:5, Interesting)
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'.
Re:Electric Cars (Score:4, Informative)
Re:Electric Cars (Score:5, Insightful)
Several dozen. They're only a small fraction of the way through the preorder list, though.
This headline is quite misleading. Tesla is not about to go "belly up". Tesla had an extremely ambitious scale-up plan (one might say overambitious), trying to get the Model S not only onto the market, but in mass production. The current credit crisis really can't support that kind of expansion from a new company like Tesla. Which, really, is why this crisis is such a disaster, especially for cleantech. Innovative cleantech companies are generally high risk, high reward. Right now, the market can only tolerate low risk. Hence, Tesla is basically undoing part of their expansion and will be focusing more on Roadsters until they get into the black rather than trying to leap ahead to the Model S. Given their preorder list, Tesla is guaranteed a revenue stream so long as they can deliver product faster than they're burning money (and they just cut some of the burn)
Re:Electric Cars (Score:4, Funny)
Exactly the way Cheney and his oil company cronies want to keep it.
/tinfoil hat.
Re:Credit crunch my butt (Score:5, Insightful)
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)
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.
Re:Credit crunch my butt (Score:4, Funny)
Economies of Scale (Score:5, Insightful)
There are economies of scale in the auto industry, but the price of an individual model still doesn't drop much.
The choice of car body material is illustrative. Fiberglass is cheaper than sheet metal for small production runs, since you don't have the up front cost of tooling up expensive sheet metal stamping machines. Sheet metal is cheaper than fiberglass for large production runs, since you can amortize the cost of the stamping machine over many units and there is less labor cost per unit. Once you have gone into production with a fiberglass body, it is not feasible to re-tool your assembly line to use sheet metal instead of fiberglass, so as to achieve an economy of scale. Such a change would a) totally disrupt the assembly line, and b) force you to redo all of your safety tests, etc.
Generally speaking, in the auto manufacturing business, you decide how many vehicles you are going to make and what economies of scale you will see years before the first vehicle is made. If you guess wrong, you don't get a chance to change your mind.
So, in the case of Tesla, if the current model is wildly successful, its price is still unlikely to come down. Instead, they will introduce a follow-on model with more planned units and a lower price from day one.
Re: (Score:3, Informative)
eh, did you bother to read that article? the Tesla Roadster is the Electric Elise. Tesla Motors licensed the Elise chassis from Lotus to build their roadster on. that choice was made probably based, not just on the aesthetics of the design, but also because Lotus has a tradition of making light-weight cars with extremely high performance and great handling characteristics. so this was a rational choice for the starting point of the Tesla Roadster.
Re: (Score:3, Informative)
true. as i understand it, the Elise doesn't have power windows/locks or any of the amenities that the Tesla Roadster has, such as stereo sound system, mp3 playback, PMP interface, air conditioning, etc. it really is a bare bone vehicle, trading passenger comfort for supreme performance.
that's why the Elise has a curb weight of about 1900~2000 lbs (depending on which model you get). the Tesla Roadster weighs significantly more at around 2700 lbs. but the Elise's engine output is only 134 bhp versus the Tesla
Re:Credit crunch my butt (Score:4, Insightful)
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.
Re:Credit crunch my butt (Score:4, Interesting)
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)
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)
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
Re: (Score:3, Insightful)
If they were made to last 100 years, they would cost twice as much and nobody would buy them. There will always be a market for reliable cars that last a long time, and electrics will presumably expand that market. There will also be a market for cheaper crappier cars that don't last as long, because some people would rather have a new less reliable car than a used more reliable one for the same price. IMO longevity and reliable are continually improving and becoming more important to consumers across th
Re: (Score:3, Interesting)
They wouldn't have remained popular in the past, but what about the future:
Once you get beyond 7 point adjustable, heated and cooled seats, do you ever need more? If the seats are easily replaceable and just need a power/data connection, it's just not hard to upgrade.
Upgrades/replacement render the upholstery issue moot too.
Hopefully the battery module has a pretty simple interface to the engine/drive system, so upgrading there isn't difficult either.
Really, with fully electric cars, there should be only 3
why VC cash may be fleeting (Score:5, Informative)
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.
Re:Credit crunch my butt (Score:4, Informative)
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.
Re:Credit crunch my butt (Score:5, Insightful)
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?
Re:Credit crunch my butt (Score:5, Informative)
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.
Re:Credit crunch my butt (Score:5, Insightful)
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)
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)
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.
Re:Credit crunch my butt (Score:5, Informative)
"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.
Re:Credit crunch my butt (Score:4, Insightful)
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...
Re:Credit crunch my butt (Score:5, Insightful)
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:Credit crunch my butt (Score:4, Insightful)
That's the answer, right there - wealth is created by people doing stuff and making stuff. They trade with other people who make and do other stuff. When people stop doing and making stuff, they haven't got anything to trade with other people who you get a vicious spiral. The means of prodyuction are still there, but standing idle and nobody wants to make the first move.
The governement is often the only actor that can make the first move. It doesn't have to be tanks and battleships, you could equally get everybody building roads or railways or schools. But that's getting a but close to Keynesianism which is akin to communism in some folk's opinion.
Re: (Score:3, Insightful)
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
Re:Credit crunch my butt (Score:5, Insightful)
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?
It's Called the "Broken Window Fallacy" (Score:4, Informative)
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:
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.
Re:Credit crunch my butt (Score:4, Insightful)
Re:Credit crunch my butt (Score:5, Insightful)
Keying the end of the Depression to the return of the DJIA to 1929 levels is wrong, in my opinion. The only reason that the market of 1929 was as high as it was in the first place was that everyone was buying stock on margin, which resulted in hilariously large P/E ratios and absurd market caps. In 1929, as now, the market crashed because the "wealth" was really just debt and didn't really exist . So I don't think it's fair to say that the Depression didn't end until the market legitimately achieved the level that it had artificially achieved thirty years earlier.
A better mark--and why most people do consider that WWII ended the depression--is that the unemployment rate all but evaporated. In the Depression, unemployment was as high as 25-30%. By 1948--the first year in which we started properly tracking unemployment in the Federal Government--it was about 3.5% [bls.gov]--a level it held relatively consistently until the 1970s oil crisis.
If you don't like the unemployment rate, let's look at the GDP. In 1929, the GDP was $103.6 billion. By 1933, it had declined to $56.4 billion. It had crawled back up to $92.2 billion by 1939.
By 1945, the end of WWII, it was $223.1 billion.
So, although you're correct that the Dow didn't return to its 1929 levels until 1960, I think trying to make the argument that the Depression didn't end until then is weak, and, ultimately, simply wrong.
Re:Credit crunch my butt (Score:4, Informative)
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.
here ya go (Score:5, Informative)
Detroit big three and bailouts [google.com]
Re:Credit crunch my butt (Score:5, Funny)
Luckily we have a Ping Pong table instead of foosball, or we'd be totally boned.
It is NOT always possible to raise money (Score:4, Insightful)
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)
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
You have no connection to reality. (Score:3, Informative)
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
Unappealing except for early adopters (Score:5, Insightful)
The L.A. Times article has more detail. (Score:2)
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.
Re:Unappealing except for early adopters (Score:4, Informative)
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)
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
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Which is exactly why they won't sell many. If they want to be like Bugatti and go bankrupt every other year, fine, build sports cars. If they want to become profitable, sell something people will actually buy.
The idea that they've put forward is to fund development with early-adopter bleeding-edge taxes. That is, the roadster isn't the goal. Its a first-run teaser. It helps pay for ongoing development of the technology by putting something exciting and attractive to early-adopters. It was also an attempt to stand out. Yet Another Econo-box would have been... well... yet another econo-box. The roadster also challenges the concept of what an electric vehicle is; that is to say, yet another econo-box.
Misleading summary (Score:5, Informative)
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Precedents ... hmmm (Score:5, Funny)
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.
Like their namesake? (Score:5, Funny)
Maybe, like Nickolai Tesla, they were just destined to have a great beginning but go nuts toward mid life.
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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
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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
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Good luck with that. Once you're a genius, the shrink will have trouble paying off his new pool so I doubt he's gonna be happy about this idea of yours.
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Now if I only I could convince my shrink that I'm actually a genius...
I don't think that's a good idea until after the trial is over.
Just sayin, IANAL, this is not legal advice and so forth.
Re:Like their namesake? (Score:5, Funny)
Tesla was OK I guess, but those lightening towers he built for the Russians used to tear up my tanks something rotten, the barstard.
Comparing Tesla Motors to Nikola Tesla? (Score:5, Insightful)
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)
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)
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)
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)
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.
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But you have to put up with higher unemployment rates [bls.gov].
-l
All you forgot about is East Germany (Score:5, Informative)
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.
wow, I was with you right up till.... (Score:3, Informative)
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)
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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.
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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)
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.
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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
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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
Tesla's been on the decline for some time (Score:3, Funny)
By my reckoning, ever since "Five Man Acoustical Jam".
What the programmer had to say about the car... (Score:5, Interesting)
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.
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I would guess that it means "if you spent the same amount in gas on a typical gasoline car", because people relate to mpg as a familiar yardstick of efficiency. You could use something something accurate like "miles per dollar", but you run in the problem that most people don't know their mpd for their car and thus can't immediately see the gain in efficientcy. Mention it in mpg terms, and you can immediately see that's it's 7x more efficient than a 20mpg car.
Let's say you spend $3 to charge your electric
We need tech startups to live (Score:2)
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.
Re:We need tech startups to live (Score:4, Insightful)
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.
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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.
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Oh, and # of lead-acid batteries in cars:1
# of li-ion cells in a laptop: 6
# of li-ion cells in a Tesla: 6,831
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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.
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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
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I love the idea of electric taxis! Most taxis are only used to ferry one or two passengers, so there is no need for the huge six cylinder sedans currently in use.
Here in the UK, taxis (well, minicabs, not "London Taxis") are usually Skodas/VWs, Mercs, Toyotas/Lexuses or Citroens/Peugeots, in no particular order. Why? Because they all have excellent diesel engines...
I have noticed more Prius taxis getting about, and can't help thinking this is something governments should be encouraging. A lot of taxis ru
Fired the CEO (Score:3, Interesting)
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.
Re:Fired the CEO - not really.... (Score:4, Informative)
... said company founder Elon Musk, who also announced that he will assume the role of chief executive officer. He replaces Ze'ev Drori, who becomes vice chairman and continues as a board member.
Looks like the old CEO is still there...
Tesla deserves to go. (Score:4, Insightful)
RS
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Are those goals mutually exclusive?
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The battery pack, from their own literature, states:
The pack operates at a nominal 375 volts, stores about 53 kilowatt hours of electric energy, and delivers up to 200 kilowatts of electric power.
Now the trike I linked to uses 750w - so just on poewr alone, the Tesla equals 266 electric trikes. True, Tesla will seat two, but odds are, it will usually seat one yuppie jackass on his way to work up and down I-280 or 101.
Tes
Bankruptcy and layoffs (Score:3, Funny)
Woosh... (Score:5, Insightful)
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.
Stupid Rolls Royce Business Model (Score:4, Insightful)
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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