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Main > Archives > 2008 > October > What Killed the Electric Car? Tesla's Layoffs.

Thursday, October 16, 2008

What Killed the Electric Car? Tesla's Layoffs.

tesla model s on hold

When Tesla Motors revealed the prototype for the Roadster, they proved that a high-performance electric car was more than a feasible concept, it was a reality. With a range of 221 miles, an acceleration of 0-60 mph in less 4 seconds and top speed of 125 mph, the public release of the 2006 Roadster created a wave of enthusiasm in two niche markets- environmentalists and exotic car enthusiasts.Despite its $100,000 price tag, the demand for the Roadster reached a fever-pitch and the base models sold-out within months.Time magazine went to the length of naming it one of the best Inventions in 2006, in the transportation category. 

Tesla's second model, the S , was slated for release in 2009, but a bad economy and a recent round of layoffs pushed production up to mid-2011. Priced at $60,000 and designed for 200 miles on a single charge of its lithium-ion battery, the Model S was considered as the reasonably affordable and practical model, compared to the Roadster. But two years later, $60 grand seems much higher to today's shopper.

The delayed release also means that Chevy will get a six-month head start with its electric sedan, the Volt, which will sell for half the price, but it offers only 40 miles of driving range after each charge. Tesla's timing reminds me of Google and T-Mobile's Android phone, which will try catch up with Apple's Iphone. However, it's safe to assume that Tesla's target market falls within the international,upper-income class category, while Chevy's largest base is middle-class Americans.

What caught my attention was Tesla's list of backers: Company chairman Mr.Elon Musk, who made his fortune as a co-founder of PayPal; Jeff Skoll, former president of eBay; and Larry Page and Sergey Brin, co-founders of Google. Unless you've been living in a submarine for the past three weeks, you're aware that eBay and Google have seen better days in the stock market. (Of course, so have most corporations)

Today's New York Times article revealed:

Tesla is trying to raise $100 million to add to the $146 million it has already raised. Backers include  Tesla is also waiting for a low-interest loan from the Energy Department, which the company cannot use until it passes an environmental review. Tesla will focus its efforts on making the Roadster, which has a one-year waiting list. It will also increase power-train sales to other car companies, a business that Mr. Musk said was profitable.

With no sign of an economic turnaround in the near future, Tesla's timing could prove to be more of an asset than a liability. By 2011, the world may have much more disposable income to throw around.

By Matt O'Hern at 01:50 PM | Comments (0)

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