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1. Pulse Energy: Buildings, Like Cars, Need Efficiency Tune-ups
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2. Tesla's Profitability Claim Was The Milli Vanilli of Cleantech
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3. Semprius Surges Into 2010: A Siemens Deal, VC Funds
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4. Daily Sprout
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5. The New Smart Grid Players: Korea, Japan, China, Oh My!
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6. Obama's 2011 Budget: What Did, & Didn't, Make the Cut for Greentech
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7. Coulomb Technologies Picks Up $14M for Electric Car Charging
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8. What A Successful Tesla IPO Would Mean: Branding Is Everything
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9. The Untapped Opportunity in the Smart Grid: Utility Applications
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10. Tesla IPO: 12 Things You Should Know
Pulse Energy: Buildings, Like Cars, Need Efficiency Tune-ups
Katie Fehrenbacher - Green IT
While Pulse Energy might not be a big name in the U.S. smart grid ecosystem, the company has done well for itself in its domestic market, including installing its combo of software and hardware in 10 buildings for the 2010 Olympics in Vancouver, among them the speed skating and hockey stadiums and the athletes’ village. Pulse also has a background with the University of British Columbia, developing software that could make sense of energy data from the university’s 300 campus buildings.
Pulse’s system has a few key parts: One, collecting the data from the building through inputs (Siemens’ and Cisco’s energy management systems, smart meters, etc.); two, using its servers to analyze and calculate data, like crunching the numbers to find out how much energy and money the energy management system is saving the building owner; three, creating a dashboard so facility managers and building occupants can see the energy data; and four, creating energy reports so building owners can dig into specific areas of their facility that need fine-tuning.
Pulse Energy is an example of a company developing next-generation applications, while much of its services piggyback off of already installed hardware and energy management systems. Helliwell says while some part of the service needs hardware, “As much as possible, we like to use existing systems.” Utility-focused applications are one of the next untapped opportunities (for a more in-depth look, check out our GigaOM Pro subscription service).
For example, UBC’s buildings already had a newly zinstalled Siemens’ building management system, and had just gotten an efficiency upgrade when Pulse came along. But the building managers couldn’t “make heads or tails” of the information that emerged, said Helliwell. UBC asked Pulse Energy to help it communicate the energy info to the building occupants, so Pulse developed a real-time dashboard for their systems. Pulse has also partnered with Cisco and integrates with its building mediator tool. As Warren Weiss, partner at Foundation Capital, put it in during our smart grid bunker event last week, the new generation of smart grid startups would be wise to stand on the backs of the giants in this industry.
If Pulse Energy can sign up those big deals in California that it mentioned to us it could mean the beginning of moving beyond its Canadian roots. This year Pulse plans to double the size of its team, and while the company has been bootstrapped to date, Helliwell says he gets calls from venture capitalists on a weekly basis, mostly from the Bay Area and Massachusetts.
Tesla's Profitability Claim Was The Milli Vanilli of Cleantech
Josie Garthwaite - Automotive
Over the years the startup has highlighted specific units — the powertrain supply unit and the core Roadster business – within the company as they became cash-flow positive. Last year Tesla even trumpeted its first-ever “overall corporate profitability” for the month of July. But as Tesla’s filing makes all too clear — it’s generated just over $108.2 million in revenues and has a deficit of more than $236 million — the company as a whole remains far from turning a real sustainable profit and has never been profitable for a single quarter (a 3-month period).
Tesla claimed in August 2009 that it “attained a significant milestone in July when it achieved overall corporate profitability with approximately $1 million of earnings on revenue of $20 million.” CEO and Chairman Elon Musk called it “a bottom-line profitability.”
In a press release, the company attributed this turn of events primarily to sales of its higher margin second-gen electric sports car, the Roadster 2. And wouldn’t that be great — if a few tweaks to the company’s much buzzed-about Roadster could nudge the company into profitability? Well, it didn’t really work that way.
Tesla told us at the time that the $20 million in revenue included “a small percentage of revenue from technology sales,” but that profitability for the month was “based primarily on revenue recorded on cars delivered to customers.” Spokesperson Rachel Konrad acknowledged back in August, “It's definitely conceivable that we would not be in the black every month going forward as expenditures ramp up" for the Model S project.
Friday’s filing suggests several other factors (in addition to Model S investments) could make a repeat-performance of the July figures difficult for some time to come. Tesla’s only powertrain deal to date, with Daimler, is for a demo project with only up to 1,000 vehicles. The filing with the SEC shows Tesla didn’t start recognizing revenues from actual powertrain sales to Daimler until the last quarter of 2009. Between May and November 2009, however, Daimler made payments to Tesla under a battery pack development agreement, including five months worth of payments that had been deferred until the contract could be finalized in May.
Tesla notes in its filing that its revenues in the three months ended September 30, 2009 “were significantly higher than in prior quarters,” after the company “made a significant effort to increase our production capacity in order to accelerate deliveries to customers.” Some of the 324 deliveries in that quarter were a matter of making good on reservations placed months earlier, rather than simply keeping up with booming demand.
Tesla notes in its filing that in the first nine months of 2009, “A significant portion of the revenue recognized during this period came from fulfilling reservations placed prior to 2009.” Some revenue during that period also stemmed from vehicles that had been delivered in 2008 but received promised powertrain upgrades last year.
Down the road Tesla might not have the luxury of backorders to help boost in revenue in a given quarter if it’s focused on getting the Model S to market. As the company writes, “We may not have a significant wait list of orders for our Tesla Roadster in the future, and we may not be able to maintain or increase our vehicle sales revenue in future quarters.” The company plans to stop producing its current Roadster in 2011 and doesn’t expect to sell a next-gen Roadster until at least a year after the Model S starts production (which at the earliest is 2012). It’s unclear whether Tesla will take reservations — collecting payments and building up a wait list –for the Roadster model during that time (in fact, Tesla anticipates it’s possible that “Regulators could review our practice of taking reservation payments,” and require the company to halt or restructure this practice).
So what does Tesla say its saving grace for profitability will be? Relatively high-volume sales of the long-planned Model S — at an estimated 20,000 per year. As BusinessWeek put it, “It's hard to see that [those volumes] happening. It took Toyota three years to get to that kind of annual sales clip with the Prius, and it sold for less than half the price.” If and when Tesla goes through with the IPO, we’ll be able to see in black and white (and for a while, probably red) how that plan plays out.
Semprius Surges Into 2010: A Siemens Deal, VC Funds
Justin Moresco - clean power
According to a Securities and Exchange Commission document filed late last month, the Durham, N.C.-based firm increased a previous round of funding (announced last June) by about $1.7 million. ARCH Venture Partners, Applied Ventures, Illinois VENTURES and a handful of others were disclosed as investors in June, but it's unclear who joined in the final tranche. We’re waiting to hear back from Semprius on more details of the funding.
Perhaps the startup's biggest win to date is its partnership with Siemens Industry Inc., a U.S. affiliate of Germany's Siemens, a global powerhouse in automation systems, power conversion and control technologies, among other things (see How Siemens Is Tackling the Smart Grid). Semprius announced last week that it is partnering with Siemens Industry to jointly develop and deploy a "plug-and-play" CPV demonstration system based on Semprius' solar module arrays and Siemens' automation and control components. The companies said the systems are slated to be installed in "numerous" test sites, including at utility sites, commercial sites, and government facilities, but they didn't say when the demos would be up and running.
Semprius says its secret sauce is what it calls a micro-transfer printing technology, a process in which semiconducting material is rapidly stamped onto a substrate, such as glass or plastic (see a video here). The technology is a faster and less expensive way to produce semiconductor devices – in this case solar modules but it could be extended to other industries such as disk drives – than current manufacturing techniques on the market, according to Semprius.
The startup's initial focus is the production of CPV modules for "large-scale" power generation. These modules would use gallium arsenide-based, multi-junction solar cells coupled with "inexpensive optics" to concentrate solar energy onto the high-efficiency cells. The company's CPV system design also calls for using dual-axis trackers, and that's at least partly where Siemens comes in — its automation and control equipment could be used to drive the trackers. In addition to any technological support from the deal, Siemens adds a new layer of validation for the startup's technology and business plan.
Semprius also announced in January that it is one of four companies selected to participate in the Department of Energy's PV Technology Incubator Program. Under the program, the department will invest up to $12 million total in the four companies to support their advancements to full commercial scale. Semprius is off to a strong 2010, but commercial production will be where the rubber meets the road.
Daily Sprout
Josie Garthwaite - Misc
Climate Spies (or Lobbyists): “Britain’s former chief science adviser says the theft of climate e-mails from the University of East Anglia in southern England may have been the work of spies,” or possibly U.S.-based lobbyists. – Associated Press via Washington Post
Incentives Proposed for Small-Scale Solar, Wind: “The U.K. government Monday introduced incentives for small-scale green electricity generation and published its plans to encourage low-carbon heating technologies, as it seeks to boost renewable energy supply to meet European Union 2020 climate change targets.” — Dow Jones Newswires
1BOG, One Year Later: San Francisco startup One Block Off the Grid, or 1BOG, says that it pulled together enough groups of homeowners to have 550 solar systems installed in 2009 (it collects referral fees from installers), and saw a profit. — NYT’s Green Inc.
Inextricable Links: For the first time, the Pentagon's primary planning document addresses the threat of global warming, noting that “climate change, energy security, and economic stability are inextricably linked.” – The Wonk Room via Grist
Chevy Volt Rollout Plan: Everywhere Simultaneously: General Motors CEO Ed Whitacre says the automaker plans to introduce the upcoming Chevy Volt “everywhere simultaneously,” at low volumes, rather than sequentially state by state. — GM-Volt
The New Smart Grid Players: Korea, Japan, China, Oh My!
Katie Fehrenbacher - smart grid
Last week at our smart grid bunker event, I had an interesting conversation with Pike Research founder Clint Wheelock who said he’s seen a growing interest from Korean electronics and communications companies in the U.S. smart grid market. Wheelock told me that Korean firms like LG Chem (which is supplying battery cells for the Chevy Volt) and Samsung SDI “have strong ambitions for the U.S. market. I believe they will soon begin business development discussions with utilities, if not already.”
Already a group of them — including LG, SK Telecom and KT — are building a domestic smart grid pilot on the island of Jeju, which is south of Seoul in South Korea. The companies told Reuters last November that they’re shooting for 30 percent share of the global smart grid industry.
KT, SK Telecom, and LG tend to spend a lot of money on R&D, taking risks and rolling out new products and services that are at the bleeding edge of technology. That can lead to some major innovations. The country's leadership in the battery space could also instantaneously give it a leg up in energy storage for the smart grid. LG Chem competed directly with A123Systems (a AONE) for the Volt deal and won, and will no doubt be competing with A123Systems and other players in the grid storage market.
Last week it became clear that Japanese companies are also closely eying the U.S. smart grid market. Japanese firms, including Toshiba, Kyocera, Shimizu, Tokyo Gas Co., and Mitsubishi Heavy Industries, will spend $33.4 million on a smart grid project in Los Alamos and Albuquerque, New Mexico. Toshiba says it will install a 1-megawatt storage battery at the Los Alamos site, while Kyocera and Sharp will test smart home, energy management and load control technology.
The national Japanese newspaper The Yomiuri Shimbun reported this weekend that Japan’s Economy, Trade and Industry Ministry will try to get the International Electrotechnical Commission to adopt 26 Japanese standards to serve as global standards for the smart grid. The paper says “The move is aimed at catching up with the United States, which has taken the lead in developing technological global standards, according to sources.”
Then there’s China, which is clearly no longer the sleeping giant in electronics, particularly when it comes to building out a smart grid. New research out from ZPryme Research and Consulting last week reports that the Chinese government plans to spend $7.32 billion in stimulus funds on building out a smart grid — surpassing even the massive stimulus funds from the U.S. government — in order help manage the doubling of its electricity consumption over the next decade.
U.S. companies are flocking to China to try to get ready for the funds, much in the same way Korean and Japanese firms are stepping into the U.S. market. Last month General Electric said it will partner with the City of Yangzhou, China, to build a smart grid "demonstration center" in the city of 4 million. Last year IBM said it signed an agreement with ENN Group, a Chinese energy provider, to form a joint venture focused on "intelligent energy,” and IBM told us it expects to generate a minimum of $400 million in smart grid revenues in China over the next four years. Hewlett-Packard, Cisco and Accenture, along with meter maker Itron are all also developing smart grid-related business in China.
Image courtesy of kodama (home)’s photostream Flickr Creative Commons.
Obama's 2011 Budget: What Did, & Didn't, Make the Cut for...
Josie Garthwaite - Policy
The Obama administration released its proposed budget for the 2011 fiscal year this morning, and within the more than $3.8 trillion plan are several programs that could help shift the playing field for greentech startups and energy companies. To start, there’s direct support for the renewable energy, carbon capture and smart grid industries, through loan guarantees, research and development project funding and other programs. Glaringly absent is the $646 billion in revenues that last year’s budget assumed would come from a program for limiting and trading carbon allowances, signaling dwindling confidence that the Senate will pass a bill with a cap and trade system this year.
The administration has also proposed to take a nearly $39 billion bite out of tax breaks for the fossil fuel industry that some advocates of renewable energy sources like solar and wind argue have blocked the gateway to grid parity and fair competition. The bulk of those cuts — $36.5 billion worth through 2020 (a small fraction of the sector’s projected revenue) – are targeted at the oil and natural gas industry ), while Obama proposes cutting tax breaks for the coal industry worth some $2.3 billion in that time frame.
The portion of Obama’s budget dedicated to the Department of Energy includes $300 million for the highly competitive grant program known as ARPA-E (Advanced Research Projects Agency-Energy), which supports very early stage, moonshot technologies that might be too risky for other investors and can open new doors for cleantech startups. Last fall, the agency awarded its first round of grants, totaling $151 million, for 37 projects — out of a pool of 3,600 applicants.
The budget proposal for the DOE, which on Friday announced a new commission on nuclear energy, also includes significant support for nuclear power plants and research: a whopping $36 billion in new loan guarantee authority for two new nuclear power facilities (tripling the amount currently available for these guarantees) and $793 million for “a new cross-cutting research program to address technology needs for all aspects of nuclear energy production.
Meanwhile, a proposed boost for renewable energy and efficiency projects would support up to $3 billion to $5 billion in guarantees. It’s a lesser amount than the nuclear loan guarantee program, but those dollars could support more projects due to the high costs associated with nuclear development (the first award under the DOE loan guarantee program last year, for thin-film solar startup Solyndra, clocks in at $535 million).
Makers of green energy equipment could also benefit under a proposed $5 billion expansion of a tax credit first created as part the stimulus package, which covers up to 30 percent of the costs for new, expanded or retooled greentech equipment factories. That likely comes as welcome news for the companies behind several hundred projects that didn't make the cut for $2.3 billion in credits awarded last month under the oversubscribed program. For smart grid technologies, the administration proposes allocating $144 million for R&D as well as demo projects.
In a major shift from the administration’s 2010 budget proposal today’s proposal does not include revenue from a cap and trade system for limiting greenhouse gas emissions. Whereas last year’s proposal assumed $646 billion or more would roll into federal coffers between 2012 and 2019, this year the President says he expects a cap and trade system will be “deficit-neutral,” neither boosting nor shrinking the government’s revenue.
Over at the Environmental Protection Agency, today’s budget proposal includes a $4 million increase over the 2010 allotment for implementing greenhouse gas reporting mandates, bringing the 2011 amount to $21 million. The agency is also aiming for a major $43 million uptick over 2010 in funding for”regulatory initiatives to control greenhouse gas emissions.” That brings the 2011 total to $56 million, with the largest chunk proposed to help states set up permitting programs for large carbon emitters.
Coulomb Technologies Picks Up $14M for Electric Car Charging
Josie Garthwaite - Automotive
At more than triple the size of Coulomb’s$3.8 million Series A round funding round a year ago, this latest funding suggests a serious ramp-up ahead for the 3-year-old company. Coulomb says the new funds will help it expand research and development, operations and sales, and gain ground in markets in Asia and South America — the latest targets in the overseas expansion Coulomb began last year, focusing initially on Europe.
With the governments of China, France and other countries investing heavily to build out national infrastructure for plug-ins, early movers in Coulomb’s space have a significant opportunity. Raising this capital to accelerate its efforts in foreign markets could help carve out a larger piece of the increasingly competitive, but still nascent EV infrastructure market.
Coulomb offers smart charging — coordinating vehicle charging and discharging according to the power grid's needs and user preferences through software. Coulomb's subscribers can get a lower rate for charging sessions if they agree to allow the utility to temporarily suspend their charging when needed. A company like smart grid firm GridPoint can connect the dots to let utilities dynamically shed portions of that load based on set parameters.
Coulomb's business model involves selling subscriptions for access to the charge points, and also collecting fees from retail stores, home and building owners, and other entities to install the equipment. Those property owners will get to keep single-use fees to cover electricity costs (with more to spare), while Coulomb draws revenue from subscribers with pre-paid charging plans. According to today’s release, more than 120 customers, including McDonalds, Dell, as well as municipalities like San Francisco, have signed up for Coulomb’s charge points, which are used by ”thousands” of electric vehicle drivers.
By selling access, rather than electricity, Coulomb could avoid a potential roadblock now facing companies like infrastructure startup Better Place, which plans to provide electricity sell electricity directly – generally the province of utilities — to drivers through a network of battery charging stations (see “5 Misconceptions About Electric Car Charging“). In California, expected to be one of the largest early markets for electric vehicles, it remains unclear whether and how the state’s Public Utility Commission will regulate third-party electricity providers.
What A Successful Tesla IPO Would Mean: Branding Is Everything
Katie Fehrenbacher - Automotive
If investors actually respond positively to Tesla’s public offering, to me, it will mean that in this media-saturated day and age, branding is truly everything. The hip silver (and green) brand, and the company’s claim to fame of being "the first, and currently only, company to commercially produce a federally-compliant highway-capable electric vehicle,” according to its S-1, will have completely outshown investor’s natural instincts to back companies that will be able to generate sustainable profits in the near term.
Tesla’s vision — to use an EV sports car to create mass appeal — is such an utterly cool concept that despite a lot of ups and downs at the company (from the founders feud, to months and months of delays of the Roadster, to layoffs, to slapping Roadster customers with charges for previously standard features, to recalls) most are still rooting for the company to make it.
The company does very little advertising, and has used word-of-mouth and media appearances to create a brand that Ad Age recently declared one of America’s Hottest. Tesla referenced its “Brand Leadership” in its S-1 as one of its competitive strengths — to me it seems like it’s by far and away it’s biggest strength.
But the problem with brands is that they can also be vulnerable. One incident with a battery that blows up, or too long of a delay in production of the Model S, could seriously handicap Tesla’s brand and thus its future. And as Business Week points out when Tesla’s Model S comes out there will be many more competitive brands out there. Nissan will have its Leaf on the market, General Motors will be selling the Chevy Volt and there will be a plug-in version of the Prius. Tesla’s best bet for a successful IPO at this point is to just to maintain its stellar brand, but then again, there’s that whole quiet period ahead.
The Untapped Opportunity in the Smart Grid: Utility Applications
Katie Fehrenbacher - smart grid
Here’s the idea: Utilities will be faced with managing 3,000 times more information on a daily basis when smart grids are built out, said Warren Weiss, Managing Director of Foundation Capital. This massive amount of data will force smart grid networks to ultimately be based on distributing computing and machine-to-machine networks, like most modern broadband and communications networks. That’s a big leap from the mainframe, point-to-point, often times manual, systems that utilities currently have, pointed out Andy Tang, Senior Director of the Smart Grid for PG&E last week.
For startups, smart grid companies and IT players this means utilities will need to buy applications and software layers that can help them manage that information and automatically control devices within the grid. Tang said that he’d seen a lot of power point presentations on tools that could automatically manage load, but not many ready-to-ship products yet. Weiss also said he’s been actively looking at applications that provide utilities automatic control and management of services.
Who will be able to sell these tools most effectively to utilities? Well, one thing’s for sure, the bigger the company, the more comfortable a utility feels with purchasing a product from them. Weiss explained it during our event as, the new startups will be smart to stand on the backs of giants to see — ie, partner up with a large, well-known player like Siemens, Cisco, or IBM. For more specifics on utility applications and services that will be the next hot space check out our GigaOM Pro story.
Tesla IPO: 12 Things You Should Know
Josie Garthwaite - Automotive
In the hours after the 7-year-old startup first filed its prospectus with the SEC, we laid out the company’s financials, noted the significance of this IPO as a test for the VC model in the green car biz and pulled out some fun facts from the filing (including plans for a big gap in Roadster sales after 2011). Here’s 12 more things you should know about Tesla’s current and future business that are tucked into the S-1 filing — from what happens if the startup’s deal with Lotus doesn’t get extended to why Tesla thinks it has the lowest-cost battery pack on the market:
What does Tesla have riding on its deal with Lotus? Tesla’s current contract with UK-based supplier Lotus is only good for another 700 or so vehicles and “gliders” (partially assembled vehicles without an electric powertrain). Tesla notes it needs to seal a new supply agreement, or extend the existing one with Lotus, or else contract with another supplier — opening the floodgates for new challenges. Tesla says it would require redesign of the Roadster chassis, adjustments in the supply chain, establishment of a light manufacturing facility, licensing of certain intellectual property rights, and more — all at great expense and significant time.
What’s Tesla selling besides cars? In addition to sales of the Roadster itself, Tesla has drawn $11.1 million in revenue by selling zero emission vehicle, or ZEV, credits to other automakers since June 2008. The startup currently has a deal with one car manufacturer for credits earned from the sale of the vehicles that Tesla made in 2009, and it has until the end of June 2010 to sell those credits under the agreement. Tesla says it’s now “negotiating to extend this agreement for vehicles manufactured in 2010 and 2011.”
Can Tesla break out of the Silicon Valley bubble? Tesla is charging into uncharted territory with the Model S, a product targeted for consumers closer to the mainstream than its inaugural Roadster. Whether the company will resonate with tens of thousands of customers outside its established insider network of early adopters remains to be seen. “Many of our Tesla Roadster sales have been made to persons who had pre-existing relationships with our management team or who are affluent individuals with a strong interest in owning a novel product,” the company observes. “It may be difficult to attract high numbers of new Tesla Roadster customers who do not have pre-existing relationships with us or who are attracted to buy the Tesla Roadster after its initial novelty phase.”
What technology has Tesla developed in-house? Battery “cooling, power, safety and management systems,” a “proprietary alternating current 3-phase induction motor and its associated power electronics,” and “extensive software systems to manage the overall efficiency, safety and controls.” Tesla believes these innovations, combined with standard components, have given it the lowest-cost battery pack currently on the market, in terms of cost per kilowatt-hour.
What’s at stake in the EPA’s new range calculations? Based on today’s EPA testing system for electric vehicle range, Tesla expects to offer electric range options from 160 miles to 300 miles. But those numbers could be up to 30 percent lower by the time the Model S rolls out, since the EPA is working on a new methodology, as Tesla notes: “Recently, the EPA announced its intention to develop and establish new energy efficiency testing methodologies for electric vehicles, which we believe could result in a significant decrease to the advertised ranges of all electric vehicles, including ours.”
Why can’t Tesla take its time with the Model S? Delays, changes in the electric range estimates and the design changes that are all but inevitable as the Model S goes from prototype to production could cause Tesla to lose customers — historically, the company says people have cancelled their reservations for the Roadster after production delays.
Moreover, a delayed Model S launch would also push back the next-gen Roadster, which Tesla does not plan to introduce until at least one year after Model S production begins. “The launch of our Model S could be delayed for a number of reasons and any such delays may be significant and would extend the period in which we would generate limited, if any, revenues from sales of our electric vehicles.”
What might keep Tesla out of certain markets in the U.S.? Legal challenges lie ahead for Tesla’s distribution model — selling its own vehicles at stores (rather than through franchised dealerships) and over the internet. As Tesla notes, “many states have laws that may be interpreted to prohibit internet sales by manufacturers to residents of the state or to impose other limitations on this sales model, including laws that prohibit manufacturers from selling vehicles directly to consumers without the use of an independent dealership or without a physical presence in the state.” As a result, Tesla may have to change its sales model for at least some states or find itself shut out of whole swaths of the U.S. market.
Can Tesla’s battery take the heat (and the cold)? Tesla mentions reports in its prospectus that “have suggested the potential for extreme temperatures to affect the range or performance of electric vehicles. Many others in the electric vehicle space, including General Motors’ Volt team, accept this as fact, but Tesla describes it as though it’s a surprising new discovery: “For example, certain recent reports have suggested that electric vehicles operated in colder temperatures may experience a reduced overall range as batteries may lose the ability to hold a charge more rapidly in cold weather. If such reports gain widespread acceptance, our ability to market and sell our vehicles may be adversely impacted.”
How likely is Tesla to win a larger supply deal with Daimler? Germany’s Daimler picked Tesla last year to supply up to 1,000 battery packs and chargers for a trial of the electric Smart fortwo in Europe. However, as Tesla acknowledges in its prospectus, “There is no guarantee that we will be able to secure future business with Daimler as it has indicated its intent to produce all of its lithium-ion batteries by 2012 as part of a joint venture with Evonik Industries AG. If Daimler goes through with this, we are likely to lose the only customer in our powertrain business.”
Does Tesla have a lock on the full $465 million DOE loan? Under its agreement with the DOE, Tesla notes it cannot “access all of these funds at once, but only over a period of up to three years through periodic draws as eligible costs are incurred,” and only then if Tesla meets certain conditions, including approval of a Model S factory site under environmental regulations, and commercial customers signing up for powertrain components.
How much of the DOE-backed projects does Tesla have to cover? Tesla has agreed to spend up to $33 million “plus any cost overruns” for the two projects (Model S and powertrain), and set aside half of the net proceeds from the IPO. The startup is also obligated to direct half of the net proceeds from the IPO to an account dedicated to its DOE-backed project. The feds will later reimburse those costs.
What’s coming down the pike? For future models, Tesla is considering an electric SUV, commercial van or coupe. “By developing our future vehicles from this common platform, we believe we can reduce their development time, and therefore reduce the required additional capital investment. Our long-term goal is to offer consumers a full range of electric vehicles, including a product line at a lower price point than the planned Model S.” Having designed the Model S with a battery pack that’s easily swapped out, Tesla says it may at some point offer Better Place-style battery swapping at its stores.
Model S photo courtesy of Tesla Motors
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