Tesla to build $60,000 “Model S” electric sedan in California

  • San Carlos (CA) - Tesla Motors announced its second electric car, a sedan that is planned to be released as “Model S” in 2010 with an expected price tag of about $60,000. At a press conference held today at the company headquarters in San Carlos, Tesla Chairman Elon Musk, CEO Ze’ev Drori as well as  Governor of California Arnold Schwarzenegger and California Treasurer Bill Lockyer said that the car will be built in California.

    The new car is substantially cheaper than the current Tesla roadster, which runs for at least $109,000. While $60,000 is not exactly heap, the cost is about in line with European performance sedans today and promises to run about 225 miles on one electric charge. If Tesla can keep its price target, the Model S will be priced right between Chevy’s Volt, which is expected to cost somewhere between $30,000 and $40,000 and Fisker’s Karma luxury hybrid, which will cost about $80,000.

    The fact that the production for the Model S is actually planned for California was somewhat of a surprise. Formerly, Tesla had plans to build their new sedan in their New Mexico Factory.  Governor Schwarzenegger said that when he heard news that Tesla had decided to produce their vehicle in New Mexico it “drove me absolutely insane, my administration does not like to loose”.

    Tesla CEO Drori of Tesla mentioned in his blog that Tesla wanted to make sure that the sedan was manufactured “as close to [the company’s] headquarters as possible”. He wrote that being able to manufacture the vehicle close to the headquarters gave the company “operational advantages”. California is also an important market for Tesla, so manufacturing the car in California makes sense from a marketing point of view.

    The state California apparently offered Tesla more incentives than were offered by New Mexico. Among these incentives was a newly approved program that exempts the builders of green automobiles from having to pay sales tax and use tax on the purchase of their manufacturing equipment. Additionally, a grant program for the training of employees was offered. Tom Dressler, a spokesman for the state treasurer told the San Francisco Chronicle that the equipment incentives being offered could help Tesla to save up to as much as $9 million.

    During the press conference, Musk and Drori emphasized the fact that Tesla has always had intentions to create electric automobiles that are both mainstream and low cost. Musk also mentioned that Tesla is working on a project that would allow them to deliver an electric car that costs under $30,000 “a lot sooner than everyone thinks”. When asked how long this vehicle would take to hit the market he said “4 years at the most”.

    If you are wondering why Tesla dropped the original “WhiteStar” codename of the sedan as a name for the final product, the answer isn’t that exciting, but a sign that Tesla is learning quickly. Darryl Siry, vice president of marketing and business development at Tesla, said that the decision was made because of branding purposes: Tesla is intended to be a brand that won’t be diluted by fancy marketing names and terms.