So it's nice that Musk has such lofty goals. Frankly, it's always been his forte. He leaves the "how to get there" to other, more little people. Like with an idea to build 100,000 cars per year by buying an idled assembly plant from a U.S. automaker. He'll leave the whole "design a mid-size sedan for it to build" to other people. Musk's an "idea man," ya know. And for an "idea man" the reality of building 100,000 mid-size sedans is kind of like trying to build a "kabillion" mid-size sedans — they're both impossible numbers when you don't even have a working design.

He also thinks gas should cost $10 a gallon. Hmm, we wonder why. Keep in mind it's not that we disagree with Musk, we just happen to believe it's also probably the price-point in which a $100,000 Tesla roadster becomes a good investment versus a sports car with similar performance. [CNet, Twitter]

Mostly Letterman wanted to know why Detroit's big car companies didn't come up with mass-market electric cars, and whether Tesla's Roadster really would save the planet. (He made a good point about carbon emissions from coal-fired electrical plants.)

But Letterman, when he let Musk get a word in edgewise, let him off easy. He didn't quiz Musk, for example, on whether the Model S show car Musk drove on set was the real thing. According to Dan Neil at the Los Angeles Times, it's not. The slapped-together prototype, a rebuilt Mercedes with a Tesla-designed powertrain, is "just barely ambulatory — more like a glorified golf cart than a harbinger of tomorrow tech," Neil wrote. And Tesla executives confessed to Neil that the car was far from being finished in its design, let alone production.

Here's another thing Letterman should have asked about: How is Musk going to build the Model S? Even if Tesla gets the $350 million in government loans it's hoping for — far from a sure thing — it will fall hundreds of millions of dollars short of the real cost of bringing the Model S to market. An insider tells us Tesla is about to close a new round of financing from a so-called "strategic" investor — that is, some industry powerhouse, rather than a traditional financier. Tesla almost ran out of money last fall, and has run on fumes since then, despite raising a $40 million round of convertible debt from existing investors.

Any new money will mean handing a large stake to the new investor. Daimler, which already has a deal to buy parts from Tesla for its own electric car, is a strong possibility. But will they leave a hothead like Musk, with his habit of stretching the truth, in charge? That's what Letterman should have asked — not if electric cars will come to market, but if Musk will be the man to do it.

More from the segment:

Lacy conducted an interview with Musk that appeared last Friday. But instead of probing Tesla's uncertain future, she invited Musk to talk about the past. The column that sparked his outrage, published last November, asked whether taxpayers should subsidize a company which makes $109,000 electric sports cars for the wealthy. Musk claimed that the Times had retracted the story. In fact, the newspaper had corrected a minor bit about Tesla's application — still not granted yet — for $350 million in government loans. Randall Stross, a San Jose State University professor and Times contributor, initially wrote that the loans would go to the production of Tesla's expensive Roadster, as opposed to funding its vaporous plans for a $57,400 sedan, the Model S.

The New York Observer has the he-said, she-said between Times Sunday Business editor Tim O'Brien and Lacy, a former BusinessWeek reporter who freelances for TechCrunch, Yahoo, and other publications. Here's O'Brien:

I think Sarah Lacy was too busy giggling to do Journalism 101 and call Randy or me for comment to make sure what Elon was saying was accurate. Because it was not only inaccurate, it was flat-out wrong. We wrote a clarification of the headline. We didn't retract the story at all; we stood firmly by the story, and I still stand by Randy's column. You can't help but watch that interview and marvel at the squishy familiarity between Lacy and Musk. And I wonder whether or not some journalistic blinders had popped off.... It was so ridiculous that it was entertaining. It was so misguided and inaccurate and I was stunned at the poor quality of the journalism.

Lacy's response:

I think it's embarrassing that The Times would try to throw me under the bus because they did shoddy reporting that they wound up correcting. If they want to throw me under the bus to make up for their own column that they massively rewrote, you know, go for it.

Actually, that was an error, too. As the Observer notes, the Times removed one sentence from the story and rewrote another.

In her defense, Lacy implied that the Times was sexist for criticizing her. But then she goes on to defend herself on the grounds that she's a girl:

I think everyone has their own style in journalism. Look, I'm a girl from the South! Sometimes I laugh. Someone can pejoratively call it giggling. But if you look at the body of my work, I ask lots of hard questions, and break a lot of hard news.

Another error. If you look at the body of Lacy's work, you'll see a pattern of oblique references to unspecified insider knowledge trotted out after someone else breaks a story. Lacy knows far more than she reports, she always implies — and yet this knowledge never seems to make its way out to the public in a way that benefits the reader.

Lacy is right that the Times is making a lame critique of her journalism. Here's what the Times should have said.

First of all, it ought never have corrected the story. Because the truth of the matter is that if Tesla persuades the government to give it loans, it will in fact spend at least some of that money on ongoing production of the Roadster. It plans to open several expensive new showrooms in the U.S. and Europe. Until late 2011 at the earliest, those showrooms will have nothing but the Roadster to sell. If the Roadster is profitable now, it is barely so. Tesla's overhead will almost certainly have to be funded through the loan proceeds.

A tipster, who's given us inside info on Tesla before, has sketched the back-of-the-envelope numbers for what it will cost to get the Model S sedan into production and thinks, even with the loans, Tesla's more than $500 million short of what it needs. The Model S "prototype" Musk showed off last month was a "show car": a one-off model of what a car will look like, but far from a finished design that can be sent into production. The tipster thinks the earliest Tesla can go from concept to delivery is 2013 — not 2011, as Musk promises, which means another two years of peddling high-end sports cars for the wealthy, as some "douchebag" dared to point out.

Here's the tip:

The untrained observer and the Government may be persuaded by typical industry show car building tricks, but insiders and auto experts know that the Model S that was revealed was a reworked Mercedes CLS. To top it off the components and parts on the vehicle are not even those ever considered in the design.

The fact is Tesla had an agreement with an OEM [original equipment manufacturer] to use their off the shelf parts in the model S. Unfortunately that agreement expires in 2010, a good three years before Tesla can get the Model S engineered (assuming they get federal money). No other OEM has been willing to give Tesla the rights to buy parts or component CAD to design to, hence Tesla would need some additional $300M to develop all of the necessary hardware (suspension, air bags and sensors, modules etc.)

Cost:

D&R the Model S $250M
Build the Factory $300M
Components to put in the car $300M
Retail outlets $50M

Asking Musk about that would have made for a fascinating interview, though Musk probably would have lobbed his insults at Lacy rather than Stross. When we asked Musk about whether he was going to personally guarantee the deposits his company's collecting on those Model S sedans, this is what he said:

I'm not going to answer your questions until you start caring more about creating a truthful picture of Tesla. I know you think you are doing good by offsetting what you see as positive spin with negative spin, but that doesn't count as being honest.

That's the moral universe of Elon Musk: Only positive spin counts as "truthful." Lacy seems very comfortable in that world.

Like Detroit, cash-strapped Tesla is currently a supplicant to the government, counting on money earmarked for alternative energy to carry it through its trying times. In other words, a good time to have a political celebrity in their corner, right? Alas, no.

Schwarzenegger frequently cited Tesla as an example of California's nascent green industries in speeches in previous years, and appeared with Tesla CEO Elon Musk at various events. But he's been quiet on the subject lately. With good reason. Two sources close to the company say Schwarzenegger aides have been talking to Tesla since at least the fall about returning the Governator's Roadster. Given the company's financial troubles, Tesla executives asked them to hold off, fearing bad publicity.

Tesla, the troubled Silicon Valley electric-car startup, has been struggling to come up with financing for production of its planned Model S sedan, a prototype of which will be unveiled tomorrow in Los Angeles. The company nearly ran out of cash last fall, and cancelled plans for a car factory in San Jose. It is currently pinning its hopes on winning loans from the Department of Energy, but that is far from a sure thing — and the loans themselves, in a bit of a catch-22, are granted based on the recipient's financial viability.

So why doesn't Schwarzenegger like the Roadster? Built on a Lotus Elise body, the car is not easy to get in and out of, especially for someone with the former bodybuilder's robust frame. "He's more of a Hummer guy," one tipster tells us.

(Photo by Justin Sullivan/Getty Images)

In an email to customers, Musk announced that Tesla Motors, once seen as the brightest hope of the electric-car industry, was set to receive $350 million from a Department of Energy loan program in a matter of months:

Regarding funding, I am excited to report that the Department of Energy informed Tesla last week that they expect to disburse funds from our $350M Model S loan application within four to five months. The Obama administration has thankfully made it a top priority to move quickly on the Advanced Technology Vehicles Manufacturing loan program, as this will both generate high quality jobs in the near term and lay the groundwork for a better environment in the future.

A Tesla flack forwarded the email to journalists, and then had to send out a hasty correction:

The newsletter contains an on-the-record statement from Elon about the expectations of the Department of Energy loans, but it's important to note that we have NOT received final confirmation from the DOE that we will receive funds. None of the 75 applications have received final approval. However, we are in the later stages of the loan application process, where the DOE is evaluating Tesla's financial viability and technical merits. The DOE is doing its due diligence, and we are very optimistic about a relatively expedient timeline for disbursal of funds.

Here's Tesla's catch-22: The government will only loan Tesla money if bureaucrats deem it financially viable. And it will only be financially viable if it gets the loan.

In the mind of an entrepreneur like Musk, this is a mere detail. The money is as good as his, and the only hangup is getting everyone to share his vision.

In fact, Tesla is far from profitable. Tesla has already raised prices on existing orders for the company's $109,000 all-electric Tesla Roadster, an admittedly nifty car which accelerates from 0 to 60 miles per hour in four seconds or less. Musk justified the move by claiming the company wasn't making a profit on current orders.

And yet, in the subject line of the email, he claimed "Tesla to be Profitable by Mid Year," and wrote:

The $40M financing round completed in December was twice the amount Tesla needed to reach profitability. Moving forward two months later, we remain on track with our cost reductions and production ramp, so it appears highly likely that Tesla will meet the goal promised to those investors of becoming profitable by mid year.

Valleywag reported in October that Tesla was down to $9 million in cash. Tesla insiders tell us that it has not, in fact, completed the $40 million in debt financing it promised to raise in November. Musk recently told customers at a town-hall meeting that the company almost ran out of cash again in December because of delays in running the money.

And a back-of-the-envelope estimate shows that Tesla is far from profitability. The company has 300 employees; estimate $120,000 per employee, including benefits, and you get $36 million in annual staff costs alone. Tesla is currently producing cars at a rate of 1,000 a year, meaning that it must make $36,000 per vehicle just to meet payroll expenses. It is nowhere close to making that much money on the Roadster, if it is making money at all. And that's not counting the cost of Tesla's fancy new showrooms; it has leased space for stores in Chicago and London, and has plans for four more.

The only way Tesla might now generate cash is by taking deposits for its Model S sedan, a mass-market car it hopes to produce in far greater volumes than the Roadster. It plans to unveil a drivable prototype next month. But it has nowhere to build the car, having cancelled plans for a factory in San Jose. And unless Tesla's government loans come through, it has no source of funding.

The only real source of financial viability Tesla now has is the power of Elon Musk's imagination. It should not be discounted: A recent GQ feature detailed how he dreamed as a 10-year-old in South Africa of traveling to space, and he now has his own space-rocket company, SpaceX.

If he can persuade government officials to back him, despite Tesla's dreadful figures, he might have a shot. If he can persuade customers to put down money for a car he currently has no means of delivering, he might have a shot. One can't fault Musk for dreaming. That's every entrepreneur's job. But his habit of talking about dreams as if they were reality could be what ultimately dooms his vision.

(Photo via Treehugger)

Musk recently sent this email to employees:

Just a quick note to emphasize the importance of quality in the Roadsters that are being delivered to customers. This takes precedence over future developments.

Happy holidays,
Elon

What's Musk referring to? Surely it's the firestorm of criticism Tesla has faced after its $109,000 Roadster, a battery-powered vehicle whose all-electric motor makes for a thrilling ride, apparently ran out of juice on camera during a test drive by Top Gear, a well-known British automotive TV show.

A Top Gear spokeswoman later admitted the scene where the Tesla was pushed into the garage was staged, and it wasn't actually out of power. But the Top Gear show did highlight problems with the car, like brakes which unexpectedly died. Could that be what prompted Musk's holiday missive?

The notion that Tesla needs to fix its current line of high-end sports cars, rather than work on "future developments," is harrowing for a company which nearly ran out of money earlier this year and is seeking a $400 million loan from the government. Tesla's main "future development" is a mass-market sedan, on which the whole premise of the company is based; the Roadster is a showy way to enter the market, not the company's real mission, Musk has said. But if Tesla engineers can't make the Roadster work, why should taxpayers loan it money for a second car that even its CEO says isn't a priority?

Add to the spacey sound track a truly silly marketing line of "space lights" known to the rest of the world as "under body neon," a classy lightning bolt logo below a yet even classier rear spoiler on the back, new leather interior and leather floors and you have a vehicle truly fit for Captain Kirk.

World Debut at the Essen Motor Show 2008

The Very First Tuned Electric Car Comes From BRABUS:
BRABUS Customization Program for the Tesla Roadster

The first tuned electric car comes from BRABUS: The first project of the future cooperation between Tesla Motors, Inc. and the new BRABUS business division Zero Emission celebrates its world debut at the 2008 Essen Motor Show. BRABUS (Brabus-Allee, D-46240 Bottrop, phone + 49 / (0) 2041 / 777-0, fax + 49 / (0) 2041 / 777 111, Internet www.brabus.com) presents an exclusive customization program for the Tesla Roadster, the world’s first electrically powered production sports car.

The new BRABUS logo with added lightning bolt is the trademark of BRABUS Zero Emission vehicles.

To give the sports car a more exciting sound the BRABUS electronics specialists have developed a ‘space sound generator.’ The occupants on-board the Tesla Roadsters can choose from several simulated engine sounds including that of a typical V8 combustion engine, a racecar engine and two futuristic soundscapes named ‘Beam’ and ‘Warp.’ The volume of the sound is dependent on the momentary power output of the electric motor.

A custom-tailored BRABUS tire/wheel combination further improves handling characteristics. The two-seater is refined with weight-optimized BRABUS Monoblock S light-alloy wheels in size 7Jx18 in front and in size 8.5Jx19 in back. BRABUS technology partner Pirelli provides the corresponding P Zero Nero high-performance tires in size 215/35 ZR 18 in front and in size 255/30 ZR 19 on the rear axle. These tires were developed to deliver minimum rolling resistance.

The two-seater also receives an even more striking exterior at BRABUS. The customization measures include a special high-quality ‘matte white’ paintjob. To give the mid-engine sports car an even more enticing face the BRABUS designers treat the front apron to a lightweight carbon-fiber front lip and daytime running lights integrated into the front grille. Matte-white surrounds for the headlamps add interesting detail to the overall effect.

The sides of the Tesla are upgraded with BRABUS entrance lights shaped like futuristic space lights. They are activated with the keyless fob or by pulling on a door handle. BRABUS carbon-fiber air inlets add even more sporty flair. Immediately apparent in the rear are the BRABUS rear wing and the BRABUS rear diffuser, both made from light yet extremely strong carbon fiber. The round taillights are accentuated further by matte-white applications.

The BRABUS customization program for the Tesla Roadster also includes exclusive interior options. The range of products starts with scuff plates with illuminated BRABUS logo. They are integrated into the top of the rocker panels.

The company-own BRABUS upholstery shop masterfully handcrafts exquisite custom interiors for the Tesla. The designers chose a combination of especially soft yet durable BRABUS perforated lightweight leather and Alcantara. The cockpit features white seams to reflect the exterior color. The vehicle floor is also upholstered with lightweight leather for added exclusivity.

The goal of the BRABUS customization concept for the Tesla Roadster is to define a potential limited edition as well as an individual tuning program for the Tesla driver.

For additional BRABUS information please visit our web site at www.brabus.com

[Source: BRABUS]

Kind of boring. If you like amusement-park rides, you'll love the Tesla Roadster. If, like me, you sit there calculating the infinetesimal odds that the operator's insurers will allow a rollercoaster to actually pose any real danger to you, you'll hate it. I spent the ride up to Coit Tower and back thinking about how much coal was burned to generate the electricity now being thrummed away by the Roadster's motors.

Back at the bar, Musk was affable enough, considering I've hinted he's taking out his midlife crisis on his employees and may be scheming to take over Tesla Motors completely by running it into bankruptcy. He laughed at the last idea, and then thanked me for the suggestion, saying he hadn't thought of that particular financial maneuver.

Musk still blames cofounder Martin Eberhard for Tesla's current straits. When Tesla raised its fourth round of funding in 2007, Musk says, Eberhard, then CEO, told investors that the Roadster's cost was $65,000, giving it a $25,000 gross margin. "It's right there on the slide, with Martin's name on it!" Musk told me. The company, he adds, was already in the middle of a search for a CEO to replace Eberhard.

A private-equity firm which had invested in Tesla sent some consultants to help Tesla sort out supply-chain issues, and they found that the Roadster's parts actually cost the company $140,000. "We might as well have sent customers $50,000 and saved the bother of making the car," said Musk. Former Flextronics CEO Michael Marks, a Tesla investor, confirmed their findings — and that's when Musk decided to fire Eberhard and replace him temporarily with Marks. Just as now, the company's cash position was running low, and Tesla tapped existing investors for new funding, despite having just raised a round. He revealed none of this at the time, he says, because it would have jeopardized the company's ongoing CEO search. (Not that that worked out particularly well; Musk installed Ze'ev Drori, then replaced him last month.)

That's Musk's version, anyway. I'm skeptical, if only from experience with Musk; when he was running PayPal, I remember him making statements that company insiders told me didn't match the facts. But as he was leaving to drive back to the Valley, Musk mentioned that his divorce from his sci-fi novelist wife Justine was a mutual matter; he got the paperwork in first, but she was getting ready to file papers, too. That, at least, checks out. I'm still not sure if I should trust Musk's account of what led Tesla to these perilous straits. But I do believe now that he's brave enough to drive a Roadster up to San Francisco and deliver it in person.

Current Tesla shareholders have 30 days to choose, through a process known as a rights offering, whether to fund the debt, which is convertible, at a later round of financing, to shares. Tesla thereby avoids setting a new, presumably lower valuation for the company — almost a certainty if it had issued new shares, given Tesla's straitened financial condition. But the reality remains: Having raised $146 million in venture capital and tens of millions of dollars more from customers putting down deposits on the $109,000 Roadster, Tesla is now sinking into debt. In January, it may obtain a $200 million loan guarantee from the Department of Energy — meaning that it will be borrowing more cash. $9 million in the bank now, with $240 million in debt to come: Tesla will soon resemble, in miniature, the stumbling Detroit giants it hoped to overturn.

Musk has previously said that Tesla will be able to turn cash-flow positive in nine months, if it receives new investment. He now says he's seeking an additional $20 million from Tesla's current investors, and expects to get it next week.

Do the math: If Tesla has $9 million in the bank, and requires another $20 million to get to positive cash flow over the next nine months, then it is burning at least $3 million a month. And that's after it laid off 24 percent of its workforce and announced plans to shutter its Detroit office.

To be fair, these pics were taken this past Sunday, so it's poor evidence the place is in fact a ghost town but let's just say a tumbleweed rolling through the parking lot wouldn't be out of place. Aside from the fancy sign out front and the etched glass doors, it looks like every other sparsely decorated suburban office we've ever seen.

We love the reading materials in the lobby — all the buff books, plus Vanity Fair, a book on classic cars, The Toyota Way and its wonderful explanation of "lean manufacturing" and the Toyota Production System (may we also recommend Machine That Changed The World and the End of Detroit). TPS, as you know, is the management process where a company welcomes questions and seeks to solve problems via all manner of available help. Openness and communication is key with TPS. Hmm, maybe they only got through the first couple of chapters.

Hilariously, our two favorite books laying around have to be the Tesla bio on the waiting room table sitting across from The Car That Could, a book about the life and death of GM's EV1. We'll let you draw your own conclusions from that one.

We can't help but point out that this statement came the same day that Tesla announced it was going to scale back Tesla Model S production plans until a government loan guarantee becomes effective. Though we fully believe that the Model S from Tesla is undergoing development and have our doubts about the electric Chryslers, this does seem a bit like the electric pot calling the electric kettle black.

WORLD PREMIERES

The result of close technological collaboration between Venturi Automobiles and Michelin, the Venturi Volage, presented for the first time at the “Mondial 2008” (Paris Motor Show), marks a major step forward in the evolution of the Automobile.

This new Venturi incorporates innovations which have enabled radical changes in terms of the vehicle’s architecture, style, dynamic behaviour and, more generally, the design of a modern vehicle.

All these changes constitute several world premières which, with the presentation of the Venturi Volage, reinforce Venturi’s capability for constant innovation, as well as its position as the most advanced company in the field of electric vehicles.

POWER TRANSMISSION & ACTIVE SUSPENSION

With 4 drive wheels with active suspension, the Venturi Volage has no equivalent. “Michelin Active Wheel” technology in fact incorporates 2 electric motors per wheel (1 for suspension and 1 for drive), ie. a total of 8 electric motors piloted in real time by spearhead electronics.

Like the mechanism of a watch, all the components, motors, gear reduction units and suspensions, are miniaturized and built into the wheels.

The active electric shock absorber system allows for total adaptation to the type of road surface and driving. Combining Michelin’s experience in the area of surface liaison with that of Venturi for the chassis, the Venturi Volage represents in its road holding, drivability and silent functioning, the sum of today’s automotive technology.

THE CAR OF THE DIGITAL ERA

Playing down the mechanical aspect in favor of electronics, close to the concept of a robot, this car belongs to a new era, the digital era. Thanks to a dashboard touch screen, the driver can configure the vehicle entirely as he wishes. This total control marks significant progress in terms of management, particularly of the energy stored in the car’s batteries: the driver can, for example, decide to give preference in certain cases to range rather than power, comfort rather than speed, an important factor for an electric car.

A CHASSIS UNIQUE WORLDWIDE

The only part that the Venturi Volage shares with the Venturi Fétish is its carbon fiber bodywork. Developed by the Venturi Design Office, this body is still a unique concept worldwide, as it is the only one to have been specifically designed to be that of an electric car and thus carry batteries within its very structure.

Thanks to this innovative design, both the Fétish and the Volage benefit from an unequalled level of safety, for both the cars’ passengers and also the batteries they carry.

The ideal distribution of the Venturi Volage’s masses - 45% at the front, 55% at the rear – and its perfectly mastered weight of 1,075 kilos enable it to attain 100 km/hr (62 mph) in less than 5 seconds.

PRODUCTION MODELS

A real demonstration of spearhead technology, the car presented in its world première is entirely operational and prefigures the production of a limited series of this model, scheduled as from 2012.

Like the Venturi Fétish assembled in our workshops in Monaco, the Venturi Volage will be assembled by hand, in the form of very limited production.

The technological repercussions of these two cars positioned at the very top end of the market are to be found on other vehicles bearing the Venturi brand, enabling as many people as possible to benefit from the firm’s advances in the field of sustainable mobility.

DESIGN OF VOLAGE, BY SACHA LAKIC

“Like a light and sensual veil, the Volage’s bodywork clings close to its exceptional technical features.

Active suspensions and motors incorporated into the wheels, a flat bottom, aerodynamic tunnels: these choices and technological advances have enabled me to “design the void” usually occupied by the engine and suspensions, and thus explore audacious new paths in terms of styling.

The void is part of the Volage style; it has been designed by subtraction.

Volage has been fashioned by the wind.
The science of aerodynamics is the main tool that has been used to elaborate its shape. It is easy and enjoyable to imagine the movement of flows of air, on and across its bodywork.

Volage finds itself in a totally original and decidedly contemporary formal category. The relationship with Venturi’s other models is obvious, though it is also possible to see, in a few details, a subtle tribute to certain icons among French cars of the pre-war era, the most elegant, the ones that were way before their time.

Volage inspires passion: its powers of seduction are immense.”