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Electric car company about to crash and burn

Flat battery
Fri Oct 31 2008, 05:30

SILICON VALLEY upstart electric car manufacturer Tesla seems to be running out of juice, a Bay Area online gossip rag reports.

Tesla is past the prototype stage, having delivered dozens of sporty, slick-looking all-electric vehicles to buyers. It had been considered a good bet to become profitable selling thousands of relatively affordable 'green' cars.

But the company recently laid off dozens of employees and announced that it was closing its Detroit office. Wednesday evening it held an all-hands meeting and told its employees that it has only $9 million left in the bank, according to one employee who'd attended the meeting.

The problem is that the company had collected tens of millions of dollars in deposits from customers for more than 1,200 cars but has delivered only about 50 of the vehicles so far.

The first few hundred cars were reportedly fully paid for, in cash up front, at $60,000 each, and subsequent car reservations required deposits of about $4,000 to $6,000 per customer.

Having already burned through most of its customers' deposit funds, Tesla might find itself unable to deliver vehicles that have already been paid for. Unless Tesla can obtain interim financing in order to build all the cars that it's promised to buyers, things could get ugly. µ



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