The Song Remains the Same

Given the recent management changes, some reassurances are in order regarding Tesla Motors' future plans. The near term message is simple and unequivocal - we are going to deliver a great sports car next year that customers will love driving.

To give you some sense of our level of confidence, a few weeks ago we allowed the major auto magazines to test drive the Tesla Roadster, and the cars performed without a hitch. In early February, you should see the results of those third party test drives on the news stands and on the web. I think results will be exciting.

Our goal is to begin full series production of the Roadster in Spring of 2008, albeit with a few components, such as the transmission, that will need to be upgraded at a later date. The transmissions in these early cars will be reliable and safe, though they will not yet meet the original performance spec for acceleration. The upgrade that we will provide at a later date will be free of charge to our existing customers.

Prior to beginning series production, our intent is to build production cars in limited quantity throughout the first half of 2008. This will allow us to exercise our manufacturing, supply chsain and customer service capabilities before we enter full production. My car, production VIN 1, is already off the production line in the UK and final preparations are being made for importation.

Tesla is also hard at work on model 2, the mid-size luxury sports sedan, which will be unveiled in the first half of next year. While the Roadster will be produced in quantities of one to two thousand per year, we are targeting over 10,000 units per year for the sedan and a price substantially lower than that of the Roadster. Looking at the longer term, Model 3 will be even lower cost and aim for an order of magnitude greater volume than model 2.

The overarching Tesla Motors goal remains unchanged from the day that I first funded Tesla (see the Secret Tesla Master Plan), which is to do everything possible to increase the number of electric miles driven. This is why Tesla is in discussions with several major car companies about providing them with a full electric drivetrain, which includes the battery, power electronics, motor, system management software, and even (groan) the transmission.

As was alluded to in the customer town hall meeting last week, Tesla will likely provide both pure electric and range extended electric drive options in the future. We refer to the latter as a REEV (Range Extended Electric Vehicle) to distinguish it from "hybrids," which are really just gasoline engine cars with a small electric motor and tiny battery. The REEV battery in our scenario would fully cover the range needs for reasonable daily usage, but there would be an onboard generator for the occasional long trip.

On a personal note, it is perhaps worth mentioning that the very reason I originally came out to California was to do graduate studies at Stanford on high energy density capacitors for use in electric vehicles. If the Internet hadn't come along, that's what I would have done, so my interest in electric cars is no passing fancy. Today I am even more committed to realizing a future where electric drive is the norm and not the exception.

Tesla needs to be profitable to be viable and grow, but this is about much more than making money. The electric vehicle revolution is critically important to the world and is way overdue. Tesla Motors, with the help of its customers and investors, is going to lead the way in making it happen.


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