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Electric Car Maker Tesla to Delay Next Model, Cut Workforce

SAN CARLOS, CA --- Electric car maker Tesla Motors, manufacturer of the battery-powered Roadster, said last week that market conditions and the current credit crisis have prompted production delays on its next-generation vehicle, the Los Angeles Times reported.

by Staff
October 20, 2008
2 min to read


SAN CARLOS, CA --- Electric car maker Tesla Motors, manufacturer of the battery-powered Roadster, said last week that market conditions and the current credit crisis have prompted production delays on its next-generation vehicle, the Los Angeles Times reported.

In addition, Tesla Motors will close two offices and have employee layoffs, the L.A. Times reported.

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"At Tesla, we have decided that the wise course of action is to focus on our two revenue-producing business lines -- the Roadster and powertrain sales to other car companies," said Elon Musk, the company's chairman who is also assuming the chief executive post. "In the Roadster, Tesla has a unique product with a large order book that continues to grow, despite softness in the automobile sector. Our powertrain business is profitable today and is also growing rapidly."

Tesla's goal is to have a positive cash flow within six to nine months, Musk said. "To do so, we must continue to ramp up our production rate, improve Roadster contribution margin and reduce operating expenses," he said. "At the same time, we must maintain high production quality and excellent customer service."

The outgoing chief executive, Ze'ev Drori, will stay on as vice chairman.

Before delivering its first production Roadster in February, Tesla raised about $140 million, mostly from venture capital firms, the L.A. Times reported. But the credit crisis is taking a heavy toll on Tesla's plans.

"Tesla and about a million other companies are in the same place," Alexander Cappello, chairman and chief executive of investment bank Cappello Capital Corp., told the L.A. Times. "There's virtually no money available from banks. There's no money for buyouts. There's no money for issuing debt. There's just no money."

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