Tesla CEO vows to personally refund deposits if there's an "Armageddon scenario"
Here's Tesla's Elon Musk, speaking in March (and just published in Car and Driver):
While the U.S. federal government needs to step in and guarantee the warranties for General Motors and Chrysler vehicles should those companies enter bankruptcy, the loaded Musk (C&D calls him an "Internet zillionaire") is apparently unofficially willing to give people interested in his company's electric cars one more reason to buy. No details are available yet about what, exactly, Musk means by all of this (a Tesla spokesperson we reached declined to clarify), but this is slightly interesting, no?Even in the worst case of an Armageddon scenario, I'll personally refund people [their money] if need be.
Another detail from C&D's interview interview worth noting is that Musk believes that part of the money issues that became public earlier this year were caused by misrepresentations from a management team that has since left the company. The board thought the Roadster (which was selling for just over $90,000) cost $65,000 to make instead of the $140,000 it was estimated it was really costing the company to make the car a few years ago. Part of the solution was to reduce costs and to refine the car in order to offer the new Roadster Sport version at a higher price point.
[Source: Car and Driver via All Cars Electric]
Reader Comments (Page 1 of 1)
Cray 7:38PM (4/06/2009)
This should minimize the critics calling Tesla vaporware. It's nice to see a CEO step up to the responsibility of any problems that may occur.
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Jared 7:43PM (4/06/2009)
If you believe Elon Musk, that is. If he told me the sky was blue, I'd look up.
tankd0g 8:01PM (4/06/2009)
He's about 2 years too late with this proclamation. The ship has already sunk.
Cray 8:01PM (4/06/2009)
Jared,
It's not my problem you feel that way. I'm not completely naive to think any entrepreneur would never lie. I'm not suggesting Elon Musk is the perfect CEO, but I applaud his comments about refunding the money and I am pretty sure he was referring to the deposits.
Any time I'm going to invest in something like this, I'll be extra critical of all the details, but in the meantime it's still nice to hear an Auto CEO step up.
simianspeedster 2:36AM (4/07/2009)
Cray,
Let me offer you a good piece of advice for this situation and so many others: this statement doesn't mean a damn unless you have it in writing and Lusk has the means to make good if Tesla goes belly up (which, let's face it, it will unless the gov't spreads seom cheese their way).
Read Tesla's contract (terms & conditions) for making a deposit on their cars and you will see clear as day that the company is not on the hook if it goes belly under; depositors simply become lowly creditors at the end of the line behind VCs and the like. If you believe an off the cuff press comment somehow trumps that contract, you're on your own.
Jared 8:49AM (4/07/2009)
Cray:
At the unveiling of the Model S, Musk said something quite different: "For those who are worried about what will happen to their deposits if the car is never produced, since the money will be spent on development and not held in escrow, Mr. Musk said: "The worst-case scenario is they would lose their money. They are at risk.""
Trust him at your peril.
Farmboy 7:44PM (4/06/2009)
Mr. Musk, there are some horsemen outside my house....
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Level 7:49PM (4/06/2009)
The car cost are low its the life styles of the Tesla Executive team that brings the total car value up....
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tankd0g 8:04PM (4/06/2009)
...in the same way Paypal refunds your money when you get ripped off. Sometimes, if the amount is small, and you bitch long enough.
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why not the LS2LS7? 8:30PM (4/06/2009)
A guarantee like this makes it look like Musk is trying to turn venture capital (his money) into booked revenue (deposits). I mean, that's what there are right? In a way, it's his money in there now, only booked as income, not capital.
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Imag 10:22PM (4/06/2009)
Word is he may not have the cash:
http://valleywag.gawker.com/5196054/money-cant-buy-elon-musk-love
Anyway, he already retracted this statement, just like he retracted the statement that they had guaranteed loans from the government, and the statement that they GE was backing them, and the numerous statements about delivery dates, pricing, etc...
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Mike 12:39AM (4/07/2009)
Just a side note - no such thing as "booked revenue" until product is shipped. Revenue recognition 101...
On the product front, they're already shipping product successfully, with proven tech and a hunger for future product. If you've ever worked in the Valley, you'd get their business model. They're going to cross the chasm with the Model S. In other words, the Roadster is purely early adopters.
Talk all you want about when they will turn a profit (or not!), but they certainly aren't ever going to bleed cash like the Big 3 in the foreseeable future.
Full disclosure - I'm on the waiting list, and looking forward to hearing where I am on that list in May!
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Chris 9:26AM (4/07/2009)
"selling for just over $90,000... $140,000 it was estimated it was really costing the company to make the car a few years ago. "
So even the darling of the electric car movement was costing the company a $50k loss to make. This just shows that electric cars are just not an affordable, profit-generating proposition for the industry. I really wonder if the Chevy Volt has any potential to make money for GM? There is a lot of speculation that the Toyota Prius and Honda Insight are loss leaders for their companies too. I know too that Ford's hybrids are loss leaders.
So far the market is unable to support the high cost of battery based products. Technology may eventually catch up to make them affordable but we are a long way off before that happens.
And I'm not a hater. I love the Tesla Roadster and the new Ford Fusion Hybrid. The new Prius looks great too. It's just that these products are not financially viable yet for their companies.
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Charles 11:58AM (4/07/2009)
It all depends on the price of gas. The ICE has had a century of development time for companies to make it more efficient and pull cost out of it. Battery technology is just now hitting its stride, so it's more expensive, as you point out. But if gas prices rise to that $4+/gallon level, these vehicles start to make a lot more sense.
jjpg2000 1:05PM (4/07/2009)
Well I hope for Elon Musk's sake Armageddon doesn't happen. Cause if it does customers are gonna be looking for a pound of flesh, and Elon just put his rump on display.
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captain underpants and the bringdown gang 11:08PM (4/07/2009)
good to know what even when the world is about to end, I will still get my money back.
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