The credit crunch is affecting all businesses including technology and especially green technology.  Established motor companies like GM and Ford have seen their stock decline drastically and have begun looking to their greener lines of vehicle to help them survive.  Smaller car companies, like Tesla, have been forced to refocus as well.

Green technology, including environmentally friendly vehicles, got a much needed boost from the recent extension of tax breaks and rebates, but with the economic situation bad and the future uncertain, finding takers for those tax breaks and rebates could be difficult.  This is especially true when your one car product costs $109,000.

Startups, like Tesla, are the hardest hit by the current economic downturn.  Om Malik recently posted a blog entry outlining Sequoia Capital’s recent warning to its investment companies.  Basically it boiled down to, get solvent, tighten your belt, its going to be a long bumpy ride.

According to the L. A. Times, Tesla Motors, the company that makes the $109,000 electric Roadster, is cutting back in several areas.  Tesla will focus on making its current car profitable and will postpone its next generation of electric cars.  Tesla will also be reducing its workforce, closing two offices, and installing a new executive officer.

Tesla  will be primarily focusing on two areas.  First, the company will be focusing on becoming “cash-flow positive within six to nine months.”  In order to do this, Tesla will be taking the cost-cutting measures outlined above and will put its main efforts behind the Tesla Roadster and powertrain sales to other companies.

This means that Tesla will delay its next generation electric car, the Model S.  All future production plans are on hold until the Department of Energy(DOE) loan guarantee comes on line.  In order for Tesla to actually obtain the loan, Tesla’s “new 89-acre consolidated headquarters” in San Jose, CA must get environmental approval.  Environmental approval is expected in the second quarter of 2009.

The new Model S, the companies mass production electric car for the rest of us, is now projected to go into production sometime in 2011 if all of the modified timelines remain unchanged.

Tesla isn’t the only green technology company affected by the recent financial services collapse.  More companies will be scaling back production or closing their doors in the months ahead.

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Entry was posted on Monday, October 20th, 2008 at 12:36 pm under Auto, Green Technology, Science and technology, Technology.

Read more entries by Susan Wilson.
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