The Tesla Roadster is gearing up to become the little car that could. Set to hit roads this fall, the zero-emissions electric vehicle goes from zero to 60 miles per hour in four seconds, can travel more than 200 miles per charge, and has attracted a glitzy list of Silicon Valley investors as well as attention from celebrities and politicians.
“We think Tesla is really the leading company focused on the electric car market,” says Ira Ehrenpreis, the head of Technology Partners' cleantech team and a recent addition to Tesla's board.
Technology Partners co-led the Series D financing round along with PayPal co-founder Elon Musk, and is the latest addition to Tesla's heavyhitting investors, which include Google founders Sergey Brin and Larry Page, former e-Bay president Jeff Skoll's Capricorn Investment Group, Draper Fisher Jurvetson, VantagePoint Venture Partners, JPMorgan Bay Area Equity Fund, Valor Equity Partners and Compass Technology Partners.
In addition to the investors that have given Tesla a little over $100 million, celebrities including George Clooney and Governor Arnold Schwarzenegger are among hundreds of people on a waiting list to pay the roadster's starting price of $98,000.
“I drove this vehicle and it is hot,” Schwarzenegger said at last year's Los Angeles Auto Show, where he implored the auto industry to “think beyond gasoline and deliver cleaner, more efficient cars”.
State and federal politicians are showing growing interest in Tesla. California legislators, via the state's Air Resources Board, recently granted the firm $561,000 toward development of a commercial battery-charging station to be installed at hotel chains across the state, while the Senate Finance Committee recently called Tesla CEO Martin Eberhard as one of five witnesses to testify at its advanced technology vehicle hearing.
“Our strategy is to enter at the high end of the market, where customers are prepared to pay a premium, and then move down-market as quickly as possible to higher production levels and lower prices with each successive model,” Eberhard told the senators, noting that Tesla has a $50,000, 4-door sedan slated to go into production in 2009. “This strategy also allows us to change radically the public perception of electric cars, opening the market for a full spectrum of electric car models.”
Eberhard said the government can help “catalyse consumer acceptance of zero emissions vehicles” via tax breaks, but noted that Tesla is not seeking government assistance.
“Our business model is sensible, our cars are designed to be desirable and profitable, and I must answer to shareholders who expect a decent return on their investment,” Eberhard said.
That return may be higher if Tesla's application is accepted for the Department of Transportation's loan guarantee programme. “It is a programme which would allow a small company like ours – which might otherwise be looking at very high rates for debt financing options – a more attractive rate, because the federal government is effectively stepping in and giving some surety to the debt issued,” says Diarmuid O'Connell, Tesla's head of strategic affairs.
Tesla is a “credible applicant” for the programme, O'Connell says. That, along with the R&D grant it received and the likelihood of future federal income tax credits for EV purchasers, makes Tesla an attractive investment, he said.
purchasers, makes Tesla an attractive investment, he said. Nor can the founders' enthusiasm be undervalued. In a blog following his Washington, DC testimony, Eberhard said he couldn't be sure if he had made a difference on Capitol Hill, but “here in California, the future of cars is electric”.