Tesla Unveils Model S Electric Sedan Next Month; Still Waiting for Fed $$ To Build It

Tesla Motors Chairman and CEO Elon Musk says that the company will unveil a "street-drivable prototype" of its long-promised Model S battery-electric sedan on March 26, and that the company anticipates receiving federal loan funds this summer for development of the car.

In a Tesla newsletter circulated today, Musk says the Model S is intended to be "one of the most functional, intuitive and beautiful vehicles on the road."

One of the most fuel-efficient as well, given that it will use electricity instead of gasoline.

In what appears to be a bit of enthusiastic overstatement, Musk also says Tesla received word from the Department of Energy (DOE) last week that "they expect to disburse funds" from the company's $350-million loan application for the Model S program "within four to five months."

In a follow-up comment, a Tesla spokesman said the DOE hasn't actually told the electric vehicle maker that the funding has been approved, just that the application is in the latter stages of the approval process, with the DOE now doing its due diligence regarding Tesla's financial and technical viability.

So it's still far from certain that the money is coming.
 
On the technical side of the equation, the company has shown with the Tesla Roadster that it is capable of developing and producing a real automobile -- albeit one based on an existing car.

But now the Tesla team will have to persuade the feds that it can build a car from the ground up and, if the rules are adhered to, do it profitably. That's something not even the world's largest and oldest carmakers are having much luck with these days.

Proving financial viability may be an even bigger challenge.

Far as we know, Tesla isn't making a profit yet, although Musk insists in the newsletter that a recent $40 million private investment financing "provided twice the amount Tesla needed to reach profitability" by mid-summer.

That's at present levels of operation, though, with just roadster production and marketing to worry about.

But Musk himself has said that without federal aid the Model S project won't happen, a pretty strong indicator that long-term profits from the company's present lines of businesses isn't enough.

As always, we wish Tesla all the best (and can't wait to see the Model S), but we're not going to be holding our breath while we wait for it all to come together.

John O'Dell, Senior Editor

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John O'Dell February 11, 2009, 2:01 PM

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