Tuesday, July 06, 2010

PayPal co-founder Musk persists in funding and floating loss-making EV startup

Can't fault a man for trying, is what some may say here. If you've got the cash and a big idea, why not? And EVs will be big one day. Only problems may be (a) that day if still a ways off and (b) starting with a sports car may grab headlines but not wider sales. OTOH Musk reckons it's a profitable business, if you discount the "high growth mode" expenses.

At some point a rethink of that growth may be in order.

Elon Musk On What's Next For Tesla - Forbes.com
The company is just over six years old and it's in high growth mode, which explains its heavy losses: $261 million in losses just since 2007. Musk has poured nearly all of the fortune he made when eBay ( EBAY - news - people ) bought PayPal (Musk was a PayPal cofounder) into his battery-operated cars. According to his divorce filing, Musk is officially broke as a result.

"I think an important point to consider is that if Tesla was just to sell sports cars and do power train work [for other] companies, we would be profitable," explains Musk. "The reason that we're unprofitable is that we're in very high-growth mode. We're eventually going to grow by 3,000% or 4,000%."

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