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Friday, January 29, 2010

Tesla To Kill Roadster in 2011

Some of the detail included in Tesla Motor's IPO filing discloses to potential investors the companies revenues will decrease substantially before the Model S is rolled out due to the fact that Tesla will cease selling its roadsters in 2011 and won't resume production on a new sports car model until at least late 2013.

The ramifications of this announcement are that Tesla will not be manufacturing ANY vehicles for anything up to and beyond a full year between canceling Roadster production and starting Model S production.

We have previously looked at the possibility of how Tesla might go about having the Model S actually manufactured but it seems even with the recent DoE $465 Million loan, $100 Million cash in the bank and possibly raising another $100 Million from an IPO they will still be stuck in between. The only disclosure given in the IPO filing about WHY Roadster production will be stopped is "due to planned tooling changes at a supplier for the Tesla Roadster"

Seeing as the entire Roadster is outsourced this could refer to ANY part on the car no longer being available after next year, but it is most likely either a tool at Lotus or the chassis manufacture Hydro Raufoss Automotive, a division of Norsk Hydro, that is being scrapped.

The chassis is built primarily from extruded aluminum epoxied together. Extrusion tooling is not all that expensive as most extruders will amortize the tooling charge over a volume run. Beyond the bonded chassis there isn't a hell of a lot of tooling involved from a mechanical stand point as the Lotus/Tesla runs a standard manual steering rack, dual wishbone front and rear suspension and ... not much else. We would presume the molds for the carbon bodywork would already belong to Tesla as they are custom to that car.

While Tesla may be unwilling to reveal exactly why they are killing the Roadster for the time being, we doubt they will be able to get away with this level of secrecy once they go public.

These shadowy details raise the risk profile of investing Tesla significantly. The company has already sneakily moved the Model S launch date back a year, hasn't signed a lease on a vehicle production facility location yet, let alone started installing the plant equipment required to actually manufacture the cutting edge all aluminum chassis, yet we're being asked to believe Tesla can pull this off single-handedly on time and within budget.

As Tesla admit in the SEC filing "The launch of the Model S could be delayed for a number of reasons and any such delays may be significant and would extend the period in which we would generate limited, if any, revenues from sales of our electric vehicles."

To date the Model S project consists of a drivable prototype not a full production intent prototype. There is no final design for the Model S, no manufacturing facility and no manufacturing process.

Perhaps when the full prospectus is released it will shed some light on just who will actually be manufacturing the Model S. With Tesla Motors total lack of experience at manufacturing anything at all in-house, they certainly need a credible manufacturing partner to give potential investors some confidence that this won't all end as a Billion dollar car wreck.

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1 comment:

Jack Rickard said...

The Tesla Roadster story is missing an important and rather obvious element.

Lotus is introducing a new car this year termed the EVORA. It is much easier to get into and out of, and more importantly, it is a 2+2 that has a much larger area behind the front seats for the location of battery modules. We could easily see a 400 mile range Tesla Roadster based on the EVORA design.

Tesla purports to build electric cars. While their product is very nice, they are basically a hugely funded "conversion shop" that converts Lotus Elise cars into a very nice electric drive version.

I believe Tesla Roadster part DUH will be based on the EVORA chassis, and as such will represent a pretty significant upgrade.

Jack RIckard

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