If it wasn’t for Elon Musk’s impressive track record with PayPal, SpaceX, and SolarCity, it would be easy to chalk up Tesla’s recent price increases and product delays as signs of impending doom. But the charismatic CEO has done a lot in recent days to reassure investors and customers Tesla is positioned to weather the economic downturn. At a “town hall” meeting Tuesday evening, Musk explained the reasoning behind the Roadster price adjustments, and provided additional details on the forthcoming Model S sedan, as well as possible future variants.

Musk said raising the prices on optional equipment was not a decision he took lightly. “This has been incredibly hard for me personally,” he admitted. “It’s like eating glass.” He was, of course, referring to making the previously-standard ‘turbine’ wheel set and 70A charger $3,000 apiece. For customers on the long waiting list who are unwilling ‘downgrade,’ that amounts to a price hike of $6,000.

Musk, whose personal fortune exceeds $350 million, has already poured a great deal of his own money into the company. “I can’t shoulder the load of the company alone,” he explained. To court new investors, it’s essential to show profitability, hence the price adjustments. “My first priority is to ensure the viability of Tesla, otherwise there will be no delivery,” he added.

He said the last round of financing was difficult to obtain. “If you can get financing by not making money, I’d like to talk to your investors,” he joked. “We had no choice.” When asked by a customer if there was any more negative news on the horizon, Musk said bluntly: “No.”

He also expressed regret over how the price increases were announced. “We wanted to talk to people one-on-one. But there’s no excuse: the communication could have been better,” he said.

Overnight charger standard, 45-minute charger on the horizon

Musk dispelled concerns that customers who opt not to purchase the heavy-duty home charger would be stuck with the measly 32-hour mobile charger. He said the standard charger will be a 220V “overnight” device capable of filling the batteries in 8 hours.

As previously noted, the 220V 70A unit, capable of charging the batteries in 3.5 hours, is now a $3,000 option. When asked by a customer why the device is so expensive, Musk said it is “very low production volume and ridiculously expensive.” He went on to say Tesla will “work to reduce that.”

He said Tesla is considering offering a faster charger later this year that would be capable of juicing up the batteries in 45 minutes. It would require 440 volts at roughly 160 amps — a power level exceeding what a typical home electrical connecting is capable of offering. A 45 minute charge is the fastest the current batteries will allow. (Some battery firms are said to be producing cells capable of 10 minute charges, but Tesla has yet to say whether it plans to start using such batteries.)

Model S to debut in March

Musk said the Model S sedan will debut in concept form in early March at a special event. Production is on track for 2011, but it could be sped up if Tesla receives the loans it’s seeking from the U.S. Department of Energy. The Model S is expected to cost around $60,000 and will be the comparable to BMW 5-Series or Cadillac CTS.

He confirmed the car will have a 300 mile range based on current battery technology. He further stated the platform — which is not sourced from another company — will be suitable for a variety of body styles. The architecture will have the “option of different ‘top hats’ — from a coupe to a delivery van,” Musk stated.

Profitability within reach; electric Smart to cost $20k

As reported last week, Tesla expects to enter profitability with its Roadster model this summer. Tesla plans to double its production rate from 15 cars per week to 30 by spring. Based on the amount of money the company has raised from investors, there is enough cash on hand to make it to profitability — with “a bit of cushion” to boot. Musk said he’s confident customers will stay on board with Tesla.

“I think people are taking a little bit of a risk in Tesla but I think it’s worth it,” he said. “It’s the hottest car in the world. A collectors car — a historic car.”

Musk pointed to Tesla’s deal with Daimler as a further sign of the company’s viability. “We’ve secured a deal to supply drive trains for Smart.” He said the car will sell for around $20,000. “It’s an endorsement of Tesla’s engineering,” Musk said. Details remain sparse, but he noted the batteries in the new Smart will be water-cooled, eliminating the costly cooling system used by the Roadster and improving performance.

    Print This Post