Clearing the Air on our DOE Loan

Diarmuid O'Connell, Vice President of Business Development, September 28, 2009

Tesla Motors was among the first automakers to apply for a low-interest loan under the Department of Energy’s Advanced Technology Vehicle Manufacturing Program. The program, created as part of the Energy Independence and Security Act of 2007 and appropriated in the fall of 2008, is unrelated to the current stimulus or "bailout" package of some American automakers. The goal of the bipartisan ATVM is to accelerate the production of fuel-efficient vehicles for mainstream Americans and reduce the nation’s dependence on oil.

As part of the loan application process, federal government scientists, engineers and analysts undertook a thorough evaluation of Tesla Motors, including an open-book inspection into our finances and intellectual property. Last June, the DOE announced that Tesla was among the first three automakers to win approval for the loans -- along with Ford and Nissan. No money has yet been disbursed to Tesla. When it is, monthly audits will ensure that the money is spent in Model S and powertrain engineering and production costs.

Tesla will use the loans to support two specific projects:

  • the US-based production, engineering, and assembly of the Model S, an all-electric family sedan. The Model S assembly plant will employ about one thousand workers in Southern California.
  • a powertrain manufacturing facility in Northern California, which will build advanced EV powertrain components for other automakers. We hope that technology will enable other manufacturers to get affordable EVs on the market much faster than developing the technology themselves. The facility will employ about 650 workers. We already sell EV components to Daimler, which will soon begin marketing an electric version of its popular and affordable Smart car.

We’re already engineering the Model S, a seven-passenger family sedan that will have a base price of $49,900 after a federal tax credit that will cost the equivalent of a car that retails for $35,000, given the relatively expensive cost of gasoline vs. electricity. The Model S can be plugged into conventional outlets or be fully quick-charged from a higher powered system in as little as 45 minutes. The company unveiled a working prototype in March 2009. The Model S platform will also be used for derivatives including a minivan, cross-over utility vehicle and a utility van for fleets and other industrial or civic uses.

Thanks to the Roadster, Tesla is the only automaker producing and selling highway-capable electric vehicles in North America and Europe, and we’re proud of its success. Tesla has already delivered more than 700 all-electric Roadsters to customers in the United States and Europe. Twice as energy efficient as a Prius and six times as energy efficient as gasoline competitors, the Roadster is an American car that gets 244 miles per charge, according to the EPA. Tesla has never applied for or received any federal loans for the Roadster, but we’ve already delivered more than 700 to customers in the United States and Europe. It is the first production automobile to use lithium-ion battery cells and the first production EV to travel more than 200 miles per charge. The Roadster set a new EV distance record in April 2009 when it completed the 241-mile Rallye Monte Carlo d'Energies Alternatives with 36 miles left on the charge. It is an important proof of concept for Tesla. We are already using some of the same powertrain technology in the Model S and in even more affordable vehicles planned for launch in the coming years.