In a boardroom shakeup at high-end auto manufacturer Tesla Motors, chairman Elon Musk is becoming CEO.
“It’s not an understatement to say that nearly every business will be impacted by what has unfolded in the past weeks,” Mosk blogged on the company web site. “This is true for Silicon Valley as well.”
Elon Musk
As the tumbling stock markets decimate portfolios and retirement plans, the market for folks who can afford a $100,000 electric sports car is likely to contract.
The company will also trim costs by reducing its workforce in what Musk calls “a modest reduction in near term headcount.” The layoffs are part of an effort to reduce Tesla’s burn rate and create positive cash flows in two to three quarters.
The company plans to focus on two revenue-producing areas of the business – the Roadster and the sale of powertrains to other auto manufacturers. Musk says the powertrain business is profitable today and orders for the Roadsters, which are expected to ship in 2009, continue to grow.
Tesla Roadster
Tesla’s plans for an electric sedan are being put on hold until the company can secure a Department of Energy loan guarantee. The DOE loan would come at “a very low cost of capital” said Musk, comparing the loan to the difficulty of “raising equity financing in what could quaintly be described as a ‘bear market.’”
Musk replaces former CEO Ze’ev Dror, who will continue as vice chairman of the Tesla board.
In closing remarks on his blog, Musk talked about Tesla’s financing, sounding a bit like Hank Paulson or Ben Bernanke trying to reassure jittery investors.
“If you have bought a car from Tesla or are thinking of doing so, please know that I personally stand behind delivering a product that you will love and continuing to develop new models in the future. We are not far from being cash flow positive, but, even if that threshold ends up being further than expected, I will do whatever is needed to ensure that Tesla has more than sufficient capital to get there.”
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1 Comments
#1. chance 10.17.2008
Elon I’m sure is a good guy. He should stick to foundations and leave cars to someone else. Our little company has some technology that will bring efficiency to levels that even The big three (maybe I should say the mediocre two and almost gone one) back to the cutting edge. The electric car is a rich guys fantasy, that’s all. I’m sure at this point Tesla Motors has found the end of the dream of mass production, and settled for a niche market of just few cars sold per year. Not to leave out GM and Bob “the moon shot” Lutz. Bob and Rick (sounds like a 50’s TV show) both hope they can out last the current downturn. Problem is GM doesn’t have 55% of the US market anymore. They’re cash position is 0 now. GM has been run like many American households, beyond their means. As Tesla re-adjust for reality, so will GM. Tesla has a better chance of survival, but they probly won’t.
P.S. If you want to see the next engine class that will carry us for 20 to 30 years? Come and see. I’d be glad to show you.
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