Green Car Maker Tesla's Troubles Signal Wider Clean Tech Woes

When New Yorkers start cutting back on Botox and rhinoplasties<sup>1</sup>, you know the financiapocalypse<sup>2</sup> is upon us. The only thing to do is hold on tight and hope the next bubble comes quick.

Cora Nucci, Contributor

October 17, 2008

2 Min Read

When New Yorkers start cutting back on Botox and rhinoplasties1, you know the financiapocalypse2 is upon us. The only thing to do is hold on tight and hope the next bubble comes quick.The next bubble on everyone's lips these days is clean technology. But if the news coming out of Tesla Motors this week is any indication, it's going to be a while before that bubble gets here.

The electric car maker announced Wednesday that it is restructuring. Founder Elon Musk is retaking the wheel as CEO, gearing up to make a "headcount reduction," and delaying the start of production of the Model S for "roughly six months to mid-2011."

In June of 2008, GM's board of directors voted to fund production of the Volt.

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The bad news comes just one month after Tesla announced it is building a $250 million Silicon Valley facility which will house the upcoming Model S assembly plant, corporate headquarters, and R&D campus. The automaker is closing its R&D operation outside Detroit.

Tesla has shipped about 27 Roadsters, its first production model, which sell for $109,000. The Model S is Tesla's planned $60,000 electric sedan. Reportedly, a $20,000 to $30,000 family car is also in the early design stages.

What went wrong at Tesla? Clearly the battered global credit markets can be fingered for the contraction of operations, but at least one observer thinks there's more to this story. "They are blaming the economy and credit markets, but the real reason is that they mismanaged the project," says EDN's Paul Rako in his blog.

Mismanaged? I'd say they've "mismanaged" their way to a production vehicle that has customers and critics drooling into their cup holders.

GM, on the other hand, has yet to get its vaunted Volt into showrooms. The automaker sat on its hands for decades, grossly misreading the nation's appetite for cleaner-running vehicles.

If there's any good news here, it's that GM may beat Tesla to market with an affordable electric vehicle, a sub-$100,000 electric vehicle -- the $40,000 Chevy Volt -- which is slated for 2010. That is, if GM can hold on while the crises runs its course.

Clean and green technology may be what the next bubble is made of, but we're not going to see it for some time.

1 Oops. There goes the market for luxury goods and services. See the Wall Street Journal's take.

2 Financiapocalypse is my new favorite word. Thanks, Lifehacker, Consumerist, and ValleyWag.

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