Tesla's Model S Hits Another Stumbling Block

Tesla, the fumbling but beloved electric car company, put its plans to build a factory in San Jose on hold according to the San Jose Business Journal.

Tesla couldn’t raise $100 million in VC funding, which it needs to build the factory. Instead, the company is hoping to get $400 million from the government as part of the Advanced Technology Vehicle Manufacturing Program. Of that, $250 million would go to a manufacturing facility and $150 million would go to an advanced battery and powertrain facility.

Tesla’s original location for building its factory was an undeveloped space, but in order to get the $400 million, the government requires that Tesla’s manufacturing facility be constructed from a rehabilitated factory. As a result the company is now saying it might have to leave San Jose to find a cheaper, better location.

This could just be a negotiating tactic with the city of San Jose, though. The article says San Jose is actively courting Tesla, asking them to stay. And Earth2Tech points out that last year Tesla said it was going to set up a factory in Mexico and abandon California. That didn’t last long, as the company remained in California and squeezed $9 million in incentives out of Gov. Schwarzenegger to stay.

The now jeopardized factory was going to be used to build the long promised $20,000 $60,000 electric sedan, the Model S. The company promises it will have a Model S ready for March and a full run of Model Ss ready for 2011.

See Also:
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