DETROIT – It’s a make-or-break moment for electric-car maker Tesla Motors.
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Tesla has lost nearly $1 billion selling high-end electric sports cars to the likes of George Clooney. Now it’s going to attempt to sell them to the rest of us — and try to make money doing so.
The company’s first mass-market, five-seat sedan will be delivered today. The car, called the Model S, will either propel the company to profitability or leave it sputtering on the fumes of a $465 million government loan.
“The Model S is going to be the first true mass-market product experiment for Tesla, one they cannot afford to fail,” said Jesse Toprak, vice president of market intelligence at car-buying site TrueCar.com.
Tesla, the brainchild of PayPal billionaire and SpaceX founder Elon Musk, has always been a moon shot. Analysts and auto industry insiders scoffed at the idea that a new car company could be created from scratch and built in a high-cost state like California. Boardroom turmoil and a string of technical problems repeatedly delayed the launch of the company’s only car, the $109,000 two-seat Tesla Roadster.
Tesla survived by creating something so unique that the price tag was almost irrelevant: A beautiful car that could tear up a racetrack without burning a single drop of gasoline. Celebrities flocked to it, giving Tesla a cache that an established brand like Cadillac could only dream of.
Now Tesla must do something much more difficult. It has to convince more traditional car customers to buy an expensive vehicle with limited range from a small, untested company.
The Model S carries a starting price of $49,900 after a federal tax credit — about the same as a Lexus RX hybrid crossover. Models top out at $101,550, or about the same as a hybrid Fisker Karma sports car.
A car that’s half the price of the Roadster lets Tesla break into a bigger market, but those customers will take a hard look at the value they are getting. This isn’t a trophy car to park on Rodeo Drive. It’s a sedan for hauling kids and groceries.
The high price will limit sales, said Rebecca Lindland, an analyst with IHS Automotive. She doubts Tesla will reach its goal of selling 20,000 Model S sedans in 2013. Nissan has sold just under 30,000 all-electric Nissan Leaf sedans since they went on sale at the end of 2010. But the Leaf is little more than half the price of a Model S.
Still, the Model S already has broader appeal than the Roadster. Tesla says more than 10,000 people have put down a refundable deposit for the sedan, and it expects to sell 5,000 this year. The Roadster has sold just 2,150 since 2008.
The first sedans will be delivered to customers today at Tesla’s factory in Fremont, Calif., a plant that the company bought for $42 million in 2010 from its former operators, General Motors Co. and Toyota Motor Corp.
Even if buyers take a chance on Tesla, the risks don’t end there. A charging network doesn’t exist in the U.S., and electric-car owners can run out of power between stops. There’s no gasoline engine that kicks in as a backup, as there is in the electric Chevrolet Volt.
Tesla is trying to ease worries about range by throwing in three kinds of chargers for home and public use and planning a network of fast chargers at highway exits. Buyers can upgrade to a battery with an industry-best 300 miles of range. The base model can go for 160 miles on one charge.
The company’s retail strategy is also untested. Its 14 U.S. stores have a tiny presence compared with the 230 stores of Lexus. When Roadsters need repairs, Tesla deploys technicians to the owners’ house. It will be far more expensive to do that if Tesla sells as many Model S sedans as it hopes. The company’s plans for servicing the cars are hazy. Musk said recently that Tesla simply wants to make cars that don’t need servicing.
“We want every aspect of that car to be as perfect as possible,” he said.
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