Maybe building the perfect car isn't so easy after all

Musk Unplugged: Tesla C.E.O. Discusses Car Troubles - Bits Blog - NYTimes.com

Mr. Musk said that 87 people — about a quarter of the company — were laid off in the current retrenchment.

He also said that the company’s second model, a battery-powered sedan called the Model S, was delayed because Tesla was having trouble raising the $100 million it needed for its next phase. Rather than turn entirely to current investors, including Google co-founders Larry Page and Sergey Brin and former eBay President Jeff Skoll, Tesla decided to ratchet back the fund-raising and slow its expansion.

Tesla’s troubles are not new. Mr. Musk is the fourth chief executive of the San Carlos, Calif., company since it was founded in 2003. The production delay follows a long line of other delays. Mr. Musk, who made his fortune from the sale of online payment site PayPal to eBay, acknowledged that building cars has taken four times the time and effort he expected.

He has invested $55 million of his own money into Tesla, which is why he stepped in to replace Ze’ev Drori as chief executive as the company reached yet another crossroads. “We’re going through a very difficult economic period and I’ve got so many chips on the table with Tesla, it just made sense for me to have both hands on the wheel,” he said.

Running Tesla means scaling back his commitment to SpaceX, which launched its first rocket in September. Although he will remain CEO of SpaceX, Mr. Musk said he will cut back his time there from about 70 percent to 50 percent.

Tesla has raised $146 million from venture capitalists and angel investors. The company had been trying to raise another $100 million when the credit crisis hit. The terms on the money became “very egregious,” Mr. Musk said, so Tesla decided to go back to past investors for $20 million to $30 million instead.

Although the company’s existing backers are wealthy enough to have easily come up with the full $100 million between them, “they wanted us, and I wanted us, to go raise external money rather than have the whole thing be funded internally,” Mr. Musk said.

Feb. '08: Is Silicon Valley the new Detroit for electric cars? | Tech news blog - CNET News

Eventually, self-driving or smart cars could help make driving more efficient and safe, Thrun said.

"When kids can drive themselves to soccer, and do away with the soccer parent, humanity will be better off," Thrun said.
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So why is Silicon Valley such a hotbed for alternative cars? It's the customers.

"The driving public here is among the most enlightened in environmental and policy issues," Gage said.