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.