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To RAMp up
production on future cars,
Siry says, Tesla will need access to even
more capital. Some of it will come from
Tesla’s selling technology it has developed.
Earlier this year, the start-up announced it
had created a new division to sell lithium-
ionbatterypacks andhad taken a$43mil-
lion order for 2007 and 2008 fromThink,
aNorwegianmaker of tiny electric cars. In
his blog, Eberhard said the company went
through sevendesign iterations before pro-
ducing itsEnergyStorageSystems.
“Along the way, word got out that Tesla
Motors ESS technology is pretty darned
good. Unsolicited, cell manufacturers re-
ferred companies to us. And other vehicle
manufacturers came asking us about our
technology,” hewrote.
Jan-OlafWillums,thepresidentofThink,
decided to place an order, which Eberhard
sayswill benefitTesla in several ways. Tesla
will be able to rampup tohigh-volume cell
purchasing, reducing costs. This will also
increase the evolution of the cells, perhaps
reducing their weight. And the company
will get an additional revenue stream, al-
lowing it togrow faster.
But Tesla will need even more money.
Siry says venture capital, given the compa-
ny’s prototype success andmarketing buzz,
is there for the taking. “We’repast themajor
risk,” he says. “It’s not likewe’re a company
with just an idea. We have a clear runway
to being a public company, which would
probably need to occur as we need access
to larger and larger capital aswemove for-
wardwithourprogram.”
Will Tesla perhaps sell out to one of the
big boys when the time comes? Siry says
“everyonehas theirprice”but that it’snot in
the plan. “Our desire,” he adds, “is to build
an independent brand.”
Todo that,Teslawillnot relyon indepen-
dent dealerships. It will own all of its deal-
erships so it can control sales and service.
It’s another way Tesla is following the path
of Apple and not Ford or GM. In his blog,
Musk described the Tesla store: “The type
ofplacewearestriving forcombines the feel
of anApple store, a Starbucks, and a good
restaurant. I include the latter, because in a
good restaurant you canalways see the chef
working in the kitchen. The chef has noth-
ing to hide, and it is a pleasure to see the
staff atworkpreparing themeal.”
Teslaplans toopen stores inLosAngeles
and theBayAreaby the endof 2007and in
New York, Miami, and Chicago after that.
Stores inSeattle,Denver,Atlanta,Washing-
ton, D.C., and other citieswill follow based
on customerdemand.
Butwhowill buy?KevinRiddell, anana-
lyst at J.D. Power and Associates, says the
Tesla Roadster is amajor change from the
electric cars of thepast, but it still has limi-
tations. It has a limited range, andwhile it
hasa fast rechargeof as littleasa fewhours,
that still takes longer thanpulling intoagas
stationand fillingup
“I think from the electric vehicleswe saw
in the late ’90s, the technology is finally
able to catch up with what people will ex-
pect from a car in general, so it doesmake
itmore competitive, even though it ismore
expensive than an internal combustion en-
gine,”Riddell says.
Riddell thinks instead therewill be a big
move toward hybrids. He points out that
there is currently no significant infrastruc-
ture inplace foranelectric-onlycar. “Where
do I go so I can plug in for a fewminutes
and continue onmy path outside of to and
fromhome?” heasks.
Siry, Eberhard, and Sexton aren’t dis-
couraged. Tesla announced a deal with
Hyatt Hotels earlier this year to install
charging stations at three hotels in an arc
from San Francisco to Lake Tahoe. ATesla
owner could drive from San Francisco to
the lake without worrying about running
out of electricity.
The Hyatt chose Tesla because, as Eb-
erhard predicted, it wanted to attract the
affluent driver likely to purchase theRoad-
ster. “The kind of customerwhowouldbuy
a Tesla and stay at a Hyatt is one and the
same,” says Jordan Meisner, regional vice
president forHyatt.Teslahasalsoreceiveda
$560,000grant from theCaliforniaAirRe-
sources Board to develop a public charging
station. And Sexton points out that there
are plans for charging stations in major
cities. Besides, most people aren’t going to
drive their electric cars across the country.
They’regoing touse themaround town.
“These days, people have more faith in
SiliconValley than they do inDetroit,” Sex-
tonsays. “Peoplearewilling to takeachance
on theDavids of the industry.”
JIMMoRRIsoN
’sworkhasalsoappeared in the
NewYorkTimes
,
the
Wall Street Journal
, and
Smithsonian
magazine.
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