Tesla Motors to show off electric sedan next month

Updated at 11:45 am PT with more details on DOE loan application.

Electric luxury car company Tesla Motors is on target to be profitable and to demonstrate a "street-drivable" prototype of its next car next month: the Model S sedan.

CEO Elon Musk sent out a detailed update to subscribers of its monthly newsletter, boasting about a backlog of orders for its Tesla Roadster sports car and assuring company watchers that the company is on sound financial footing.

Tesla Motors CEO Elon Musk in a Roadster

(Credit: Tesla Motors)

"We remain on track with our cost reductions and production ramp, so it appears highly likely that Tesla will meet the goal promised to those investors of becoming profitable by mid year," Musk wrote.

The company raised $40 million in December last year and at the same time admitted to being low on cash. It also had to scrap plans to raise money through an initial public offering on the stock market.

Musk said the company plans to show off a prototype of the Model S on March 26 at the California factory of SpaceX, Musk's space tourism venture.

The Model S is a four-door, all-electric luxury sedan that Tesla expects to start manufacturing in 2011. A ballpark price the company has stated is $60,000. The list price on the Roadster is $109,000.

In a significant financial development, Musk said that Tesla expects to receive $350 million in Department of Energy loans to build a factory for the Model S within four to five months.

Company representative Rachel Konrad said that Tesla's DOE loan application is in the "later stages" but the company has not yet gotten confirmation that it will receive the loan. "The DOE is evaluating Tesla's financial viability and technical merits. The DOE is doing its due diligence, and we are very optimistic about a relatively expedient timeline for disbursal of funds," Konrad said in a statement.

In an interview last Friday, Energy Secretary Steven Chu said he is trying to expedite the loan-granting process at the DOE in an effort to revive the economy.

Musk said that the Roadster is sold out for 2009, meaning that Tesla has received orders for all of the cars that it can produce. The Tesla Roadster Sport, which accelerates a tad faster than the Roadster, is set for delivery in late June.

The Tesla Roadster at Tesla's Mountain View, California store.

(Credit: Stephen Shankland/CNET Networks)

It has reached agreements to open Tesla-owned stores in Chicago and London's Knightsbridge district and is plans to open outlets in Manhattan, Miami, Seattle and Munich.

Musk also detailed a battery-swapping program for current owners, where they can prepay to get a discount for replacement battery after seven years.

The life and durability of batteries is something of an unknown for electric vehicle manufacturers and customers, leading some automakers to consider battery-upgrade programs.

"One of the top questions customers ask about the Roadster is, 'How long will the battery last and what will it cost to replace?' Tesla engineers have determined that a Tesla battery pack should last approximately seven years or over 100,000 miles under normal use," Musk said.

[42istheanswer]

I would buy one if the price were between $10,000 and $15,000. We'll see how viable they are at their stated price a year or two from now. By then we should be firmly in the grips of the depression. RIP.

[supergoodnachos]

Wow, I'm sure glad I can subsides electric cars for the rich and celebrity do-gooders.

I'll pay attention to Tesla when they can create a car for the average person, not the 5% of people who can afford a $60k car. Create a sub $30k vehicle and then maybe I'll consider them. For now they're just a super luxury brand.

[HeavyJim]

Yawn, another toy for the rich.

[KayakFun]

It may be expensive to buy, but running costs are very affordable, and rare as they are the 2nd hand price will be high too. It would be interesting to see a TCO study over 1, 3, and 5 years. It's like buying solar collectors and PV panels, pay once and enjoy cost savings after that.
With banks proving to be unreliable moneypitts for greedy managers, a Tesla may be a safer storage of your money. Drive it a few years for a fraction of the running cost of any gasoline-powered exotic, and sell it when you need your money again.

[forever4now]

All new technology products are expensive, when they are first introduced. Tesla demonstrated the REAL potential for electric cars by making one that is fast & sexy and is now starting to move down the food chain.

One major thing going for Tesla is that it was born in Silicon Valley. Silicon Valley has innovation, speed & continuous cost improvements in its blood & this may be the wildcard that helps Tesla succeed in what is likely to become a very competitive global marketplace for the Car 2.0 era.

[ecotony]

What nice 4 door car costs $10-15k new? NONE.
To say they should sell cutting edge technology for econobox prices is nonsense.

That being said, when these start to sell at $25-$35k, we are talking sales volume.

The big 3 put their heads in the sand for the last 15 years and have built bloated land yachts that guzzle gas and pollute. How much money are we throwing their way?
We should be subsidizing innovation like this to move it more into the mainstream and bring down the costs. Add that with the fact that we are ultimately going to toss out internal combustion engines in the future makes this investment a smart one by the DOE.
JOBS in the US making cutting edge cars is what we should be supporting. No bailing out the big 3 so they can continue to crank out overpriced SUVs.

[uoftdrone]

The Tesla business model IS to start out by offering models to the super rich and work it's way down the cost latter/learning curve. Just like cell phones. This is the only auto bail out I am happy with. Too bad they didn't go through with their IPO. I would have invested the little money I have left!

[Mooranon]

Thank god my tax money will be going toward creating overprice toys for the elite. Here I was worried about the environment and it takes a spiffy car like this to make it evident that the average working guy and gal are nothing but walking pockets for the rich and famous.