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Tesla's Funding Dwindling; Expansion Delayed

Has Tesla finally run out of gas?

Tesla, the California-based maker of electric "supercars", has not raised the $100 million it needed to expand. Originally, the makers of the all-electric, two-seater Roadster planned on raising USD $100 million in VC funding, which would help fund a brand new 600,000 square foot headquarters in San Jose. Along with its business offices, the campus would have brand new facilities for battery research and drivetrain manufacturing. 

"We abandoned (the VC route) because the VC financing environment became so tight and difficult,” Tesla spokesperson Rachel Konrad told the Business Journal on Wednesday.

Now that VC is no longer an option, Tesla is seeking two low interest loans from the federal government, totaling $400 million. $150 million is marked for battery and drivetrain research and manufacturing, while $250 million is intended to fund the company's next car offering known as the Model S. Announced in November, the Model S is an all-electric sedan that will cost around $60,000 and get 240 miles on a single charge.

Because Tesla is now seeking money from the governments Advanced Technology Vehicle Manufacturing Program, it can no longer build its planned facility on the previously proposed ground in San Jose. The original build site is an 89 acre strip of land in between California's Highway 237 and San Jose's Zanker Road. The area is a "greenfield", and has never been developed before. The federal governments program wants companies to build on "Brownfields", or previously developed areas that can be reused.

Unless some serious concessions are made by the government, Tesla will have to find another site. However, local politicians seem optimistic that Tesla can cut through the red tape. “We’re very optimistic, even with Zanker Road,” said Michelle McGurk, an adviser to San Jose Mayor Chuck Reed. “We know all the reasons Zanker Road made sense, and it still might make sense depending on how things shake out.”

The Advanced Technology Vehicle Manufacturing Program is a $25 billion federal fund dedicated to spurring the production of cars based on alternative fuels, electricity, or hybrid technology. Tesla is one approximately 75 companies applying for funding.

Devin Connors currently works as a community manager for Rocket League at Psyonix Studios, but he was previously a senior editor at Tom's Guide, writing about gaming, phones, and pretty much every other tech category. His work has also appeared in publications including Shacknews, GameZone, The Escapist, Machinima, and more. 

  • Pei-chen
    Tesla wouldn't have existed if it were not for the mortgaging bubble. $100,000 super electric car for investment bankers, LOL. The Fed should nationalize Tesla and transfer the battery research department to GM; enough resources has been wasted on building a car for the rich and not one that can make electric bus more common place.
  • @pei-chen
    LOL... Tesla came from nowhere and built that car from the ground up (using cells from laptop batteries and custom designed computers to manage the cells) while Detroit sat on their collective a**es and kept pushing suvs and the same old 20-25mpg sedans. Detroit kept claiming it couldn't be done (even with all their cash at the time) and one man manged to do it. the plan from the start was build the roadster, collect capital from the rich eco friendly people and dump it back into the development of cheaper even more advanced models...lets see where did gm's money go? ceo's pocket books? private jets?
  • peter_b123
    What, birkenstock-wearing malnutritioned greenies don't have $100,000 to buy a car from their barrista jobs?

  • blackbeastofaaaaagh
    Yes, Tesla's are expensive and for the rich.
    The latest and greatest technologies always find themselves in expensive products first. However, as production picks up and cash flow increases manufacturings and engineering obstacles to low cost are eventually solved.
    GM, Ford, Chyrsler wasted over $6 billion of the tax payers money in a joint venture with the govt. to build an electric car. When their lobbying efforts to kill the project finally succeeded, GM couldn't ship all those hundreds of EV1's to the crusher fast enough. Toyota Honda, however, panicked about an impending domination of the big three in alternate technology vehicles and raced to bring their hybrids to the market.
    That such a small firm like Tesla could make an ecomomically viable electric vehicle speaks volumes about the big-3's lack of foresight, and unwillingness to change from making gas guzzling SUVs.
  • I guess Pei-Chen would prefer GM take over so that they can outsource the assembly line to Mexico to save money, and still charge $100k. Let's bailout Tesla, Honda and Toyota, all 3 are far more American than the big 3s 50% American parts + assembled in Mexico/Canada P.O.S. vehicles. Some Honda/Toyota vehicles have 90%+ American made parts, and are assembled here, the big 3 are just an epic fail.
  • Christopher1
    Pei-chenTesla wouldn't have existed if it were not for the mortgaging bubble. $100,000 super electric car for investment bankers, LOL. The Fed should nationalize Tesla and transfer the battery research department to GM; enough resources has been wasted on building a car for the rich and not one that can make electric bus more common place.
    Tesla's car was only so expensive because of the materials that needed to be used in it. And GM canceled their electric car, because of the same problems: it would have been E X P E N S I V E, underlined and bolded 3 times.
  • neiroatopelcc
    The way GM handles their finances, they'd probably end up spending more money on each car built than vw does when building a veyron (which is excessive) .... If GM is to make an alternative car, they should buy a license to produce cars based on Honda's fcx. GM makes a lot of brilliant cars, but their management has always been poor at best. And somehow they always end up making the wrong choices, so even their most brilliant cars are somehow mundane, breaking down, ugly or simply too expensive.
  • antilycus
    the future is in on demand hydrogen from water, not electricity...think long term...
  • I wrote my thesis on building a hydrogen economy. It can be done. For all those touting how inefficient it is to procure usable hydrogen, how efficient are automobile combustion engines at extracting the energy from the fuel? It would be far more efficient to use electric generators who specialize in energy efficiency to produce the electricity to power electric vehicles, or produce hydrogen powered vehicles. Pure electric vehicles would be the best with regards to efficiency, but they are very cost prohibitive for the average consumer. Building a Hydrogen powered vehicle would only require a need to make a few modifications to existing combustion engines (lubrication systems because gasoline acts as a lubricant whereas hydrogen gas does not). You could even have dual fuel, switching from hydrogen to regular gasoline if you run out of either. It can be done, unfortunately the powers that be will not let that happen. The best containers for stably storing hydrogen (metal hydride) are for some reason, nearly impossible to acquire for consumer use. Google Jack Nicholson and hydrogen. This concept perfectly displayed in the 70s...
  • hurbt
    Nuke plants + water = abundant hydrogen = cheap, portable power So, ya, i agree... it is possible.

    The problem is getting the greenies to wrap their un-open minds around the fact that nuclear (pronounced nuke-you-ler for Bush fanatics) is actually far less polluting than any other source of energy.