Tesla Motors’ road to profitability runs directly through mass production of the electric car startup’s long planned Model S sedan. Where will that production take place? Downey, Calif. appears to be the front runner at this point. As for when a plant in Downey will be ready to start cranking out vehicles, it looks like Tesla may be coming in just under the wire to meet its goal of entering “volume production” and beginning deliveries of the Model S in 2012.
According to draft regulatory documents recently obtained by the Downey Patriot and dated February 2010, the startup expects the process of setting up manufacturing facilities on a site currently occupied by Downey Studios to take 18 months. We learned from a spokesperson at the Energy Department’s loan program office today that Tesla’s draft environmental assessment needs to go through one more iteration internally before it can be approved and released publicly — a process expected to take several weeks.
The 18-month timeline includes “preparing the buildings, installing the tooling and firing up the assembly line,” according to comments from Tesla spokesperson Ricardo Reyes in this post on Wired’s Autopia Monday afternoon. Given that time frame, if Tesla breaks ground on the project this month, and work proceeds on schedule (not guaranteed, as Tesla has acknowledged in its S-1), the assembly line wouldn’t fire up until fall 2011.
The Patriot reports that manufacturing of the Model S, if it goes ahead in Downey, would take place in three buildings on the property. Smaller buildings on the site would be used to store tools, provide employee services and house materials. We’ve reached out to Tesla today asking whether the company expects to be able to start producing Model S cars at the Downey site in less than 18 months after starting work on the project, possibly by phasing in critical production and assembly lines ahead of lower priority facilities.
According to former Tesla marketing VP Darryl Siry, however, Model S production remains a distant milestone. He writes in a blog post that “actual production of the vehicle for customers” could take as long as a year after completion of the facility, pushing production to the fourth quarter of 2012.
In the meantime, Tesla still has its initial public offering in the pipeline. The company’s latest amendment to its S-1 filing with financial regulators shows Tesla’s Board of Directors have approved what’s called a one-for-three reverse stock split. If shareholders approve the split, this would reduce by two-thirds the number of outstanding shares (currently more than 300 million). Pre-IPO companies — after handing out shares “by the boatload,” as the San Jose Business Journal has put it, to lure employees, venture capitalists and preferred investors — often do a reverse stock split in an effort to garner a higher price per share when they go public.
Siry, in a blog post on Friday, predicts Tesla will be valued by the market at the time of its IPO “between $1 billion and $1.5 billion,” and notes that at a value of $1 billion, that would be just 10-15 percent higher valuation over Tesla’s last round of financing.
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