Tesla Motors, the Bay Area's luxury electric carmaker, won $465 million in federal loans Tuesday to build two plants in California, as the Obama administration started doling out funds for fuel-efficient vehicles.
Tesla joined Ford Motor Co. and Nissan North America in receiving the first round of loans under a $25 billion U.S. Department of Energy program to develop cars that use substantially less gasoline - or none at all.
"We have an historic opportunity to help ensure that the next generation of fuel-efficient cars and trucks are made in America," said President Obama.
Ford will get $5.9 billion to retool factories in five states, improve the mileage of its existing cars and build a battery-powered version of its popular Focus. Nissan will receive $1.6 billion to make electric cars and battery packs in Smyrna, Tenn.
Bay Area facility
Tesla, based in San Carlos, will use $365 million to open a production facility in Southern California for its next car, a sedan dubbed the Model S that could hit the market in 2011. An additional $100 million will help the company open a Bay Area facility to build electric powertrains, some of which will be sold to other automakers. Tesla has not revealed the precise location of either facility.
"It helps accelerate the mission of this company: developing the mass market for electric vehicles," said Diarmuid O'Connell, Tesla's vice president of business development. "We are very excited to move forward with both these projects. We think this is a harbinger of great things to come in the automotive industry."
Environmentalists were pleased to see the financing finally start to flow. The loans awarded Tuesday are part of a federal program created in 2007 to develop fuel-efficient cars. But Congress didn't provide funds for the program until last year.
"It's a one-two punch strategy," said Patricia Monahan, deputy director of the clean vehicles program at the Union of Concerned Scientists. "We need some government investment in advanced vehicles, and we need stringent mileage standards. Then let the market pick the winners."
Tesla has based its entire business around targeting the top of the market.
Sexy - and costly
The company's first and so far only car - a low-slung roadster that sells for $109,000 - popularized the idea that electric cars could be sexy. Celebrity buyers included actor Matt Damon and San Francisco Mayor Gavin Newsom. The company has delivered more than 500 roadsters to date.
The Model S sedan, which the company plans to start building in late 2011, will cost about $49,900, after buyers take advantage of a $7,500 federal tax credit for advanced-technology cars. The company plans to add more models in the future, with each generation becoming less expensive.
"Clearly, a $100,000 sports car is out of my range - it's out of most people's range," said Sherry Boschert, vice president of Plug In America, an advocacy group for electric cars. "But a lot of early adopters bought it. And their next car will cost half as much."
Tesla has had a turbulent year.
Credit crisis hurt
In September, the company announced plans to build a factory for the sedan in San Jose. But those plans fizzled after the credit crisis cut off access to financing.
In May, the company had to recall more than two-thirds of its roadsters to fix rear bolts that were improperly installed. Co-founder Martin Eberhard sued CEO Elon Musk, accusing him of slander and breach of contract. And critics questioned whether federal financing should go to a luxury carmaker whose products most taxpayers can't afford.
At the same time, the company has been making steady progress bringing down the roadster's production cost and should become profitable this summer, Musk said. And in May, German automaker Daimler bought a nearly 10 percent stake in Tesla. Tesla had already agreed to supply battery packs for Daimler's new Smart electric minicars.
The federal loans announced Tuesday will cover roughly 80 percent of the cost of opening Tesla's two new California plants. Each plant will occupy an existing industrial facility, so Tesla doesn't have to build from scratch. The federal loan program gives priority to projects that reuse existing facilities.
The Southern California plant will employ about 1,000 people, while 650 will work in the Bay Area facility.
Governor happy
Gov. Arnold Schwarzenegger, who has made creating "green jobs" a priority, welcomed the loan announcement Tuesday as a victory for California and the country. Schwarzenegger ordered a Tesla roadster before they hit the market, but later switched his order to a sedan, a spokeswoman for the governor said.
"California is leading the country's transition to a clean energy future, and with companies like Tesla based here and the assistance of the Department of Energy's new program, we are spurring the development of green technologies and jobs - setting the stage for robust 21st century growth."
Ford Motor Co.
Got $5.9 billion DOE loan to:
-- Improve the fuel efficiency of more than a dozen existing car models.
-- Build a new battery-powered van and Focus.
-- Convert two truck plants to car plants.
-- Retool plants in five states.
Nissan North America
Received $1.6 billion loan from DOE to:
-- Modify existing assembly plant in Smyrna, Tenn., to make electric cars.
-- Build a battery plant at the same location.
Tesla Motors
Received $465 million Department of Energy loan to:
-- Open a Southern California assembly plant to build its new Model S electric sedan.
-- Open a Bay Area facility to make electric powertrains and battery packs.
E-mail David R. Baker at dbaker@sfchronicle.com.
This article appeared on page A - 1 of the San Francisco Chronicle
source:sfgate
