Tesla Backpedals on Model S Factory Promise

Not too long ago, Tesla Motors CEO Elon Musk called a government guarantee for loans to build its mass-market electric sedan factory a “when, not an if.” Supposedly all the luxury electric car startup needed to begin construction on a plant for its elusive Model S was a $200 million loan guarantee from the Department of Energy. But in an interview with the San Francisco Chronicle, his confidence turned to hedging on plans to produce the Model S for the duration of the recession. The Chronicle writes:

The factory project wasn’t abandoned, but Musk says it’s no longer a done deal. . . . Rather than ramping up, the company is hunkering down. “I hate it,” said Musk. “I really didn’t want to do it. But I also didn’t want to be a casualty of the recession and see all that time and effort go to waste.”

Musk isn’t too worried, though. Again, from the Chronicle:

Musk says the company is now in good shape to reach profitability, despite the recession. Still, he’s hoping the recession will be brief, perhaps ending in a year. “It’s funny: in the good times, no one thinks there can be bad times,” he said. “And in the bad times, no one thinks there can be good times.”

Musk’s predicted timeline matches the one generally agreed on by forecasters. But while the recession is expected to officially last until mid-2009, recovery could be slow enough to make a turnaround next year little more than economic semantics. As the banking system rebuilds, credit markets could remain tight and keep Tesla’s long-promised Model S entirely out of reach.

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