Niche electric car maker Tesla has announced that they will become the latest automaker to seek a government loan package.
Niche electric car maker Tesla has announced that they will become the latest automaker to seek a government loan package. The company is requesting $500 million dollars from the US in order to keep their model S sedan on track and they are threatening not to open their $250 million dollar factory in San Jose, California if they are refused aid.
Tesla's CEO, Elon Musk, stated that the funds are needed to produce the model S sedan which will be priced at $57,499. He said that the company simply cannot move forward with production without a major injection of capital, and added "If we don't get any government funding, then what we need to do is wait until the capital markets recover, which could be a year or two years from now."
The company is requesting the aid be supplied through the Department of Energy's loan program that encourages the development of energy-efficient vehicles. This is the same program that Detroit's big three used to get $25 billion dollars for retooling, and is now expected to serve as the funding source for the $15 billion dollar emergency loan package for the automakers.
Tesla has been in the news lately for a chaotic management and financial crisis which has crippled the company. Recently a cash shortage left Tesla with a cash balance below $9 million dollars and investors had to come to the rescue by injecting $40 million dollars into the company, a move which was supposed to put the production back on track.
If the government approves Tesla's bid for a loan, the company could begin producing the new model S sedan by 2011 with a target output of 20,000 cars annually.