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Tesla Incentives Come to About $10M, Says Calif. Treasurer

Michael Kanellos: June 30, 2008, 11:47 AM
Why is Tesla putting its sedan factory in California? There are ten million reasons. The incentives provided by the State of California to the car company come to about $10 million dollars, state Treasurer Bill Lockyer told me. Most of the incentives come in the form of tax holidays. (I had to duck under some black and yellow caution tape to talk to him, but he was downright polite. Didn't call security or anything. Glad I voted for him.) Financial incentives are a key part of hardware manufacturing and many other parts of the tech world. Intel and other chipmakers regularly shop the world for tax breaks and other incentives. And in many countries, they are willing to oblige. Dubai gives companies 50 year holidays from corporate income taxes. In Taiwan, some profitable chip companies make more money after taxes because of accumulated credits. For biotech firms, Singapore is an open checkbook. Thus, although $10 million could certainly help many other government divisions in the state, it's not outrageous. Besides, the theory is that it will bring jobs to the state. Nonetheless, feel free to feel queasy about millions in benefits going to a company staffed with actual and soon-to-be millionaires. If you ever hear a Tesla employee complaining about government handouts and state interference with the free market, remember this grant. The provision, by the way, is part of a bill that was passed ages ago, Lockyer told me. It was just never implemented. The state will also give tax breaks to people who buy non-polluting cars.

All-Electric Cars for Under $30K in Four Years, Says Tesla Founder

Michael Kanellos: June 30, 2008, 8:15 AM
Tesla Motors chairman Elon Musk is serious about getting beyond sports cars. At a press conference with California Governor Arnold Schwarzenegger, Tesla co-founder and chairman Elon Musk said the company has an ongoing program to produce an all-electric car that will cost under $30,000. It probably take "four years at most" to get such a car out, he said. "This is not about addressing a sports car shortage," he said. Tesla has talked about doing moderately-priced cars since the beginning, but the company now is getting firmer on their plans, which in turns means they are serious. Getting out an electric car out for less than $30,000, though, won't be easy. Batteries still cost quite a bit and battery technology doesn't improve as fast as semiconductor technology. You get about a six percent improvement in performance every year. With chips, it's closer to 60 percent. Electric car companies also need component suppliers to start ramping up parts for them. Additionally, Tesla has had to face delays before. The company today announced that it would come out with a $60,000 sedan in late 2010. (It will be built in California, thanks to about $10 million in incentives. That's why Arnold was there.). Still, the sedan, once called White Star and now called Model S, was originally due to come out in late 2009. It was delayed because of delays to the Tesla Roadster, which started dribbling out of the factory this year. As a result, the Model S will come out at about the same time as the Chevy Volt, which will use a little gas and cost $30,000. (Tesla will also do a gas-electric car like the Volt.) But, on the optimistic side, a few years ago electric cars were novelties. They are clearly moving into the mainstream now thanks in large part to Tesla. And companies like Nissan with a lot more expertise in buildings cars in large volumes are bent on coming out with electric cars.

SVTC Part 2: A New and Crucial Piece of the PV Ecosystem

Eric Wesoff: June 30, 2008, 4:56 AM
Scenario 1: Let’s say you’re a newly funded silicon solar startup and want to experiment in the wafer manufacturing process. You go to your VC investors and ask them for $25M to buy and install a small silicon wafer production line. Scenario 2: Let’s say you’re a process development engineer at an existing, up and running solar firm. You have a brilliant idea on how to improve the production process, so you ask your manufacturing director if you can make some changes on the commercial production line. In both cases the likely response will be a resounding “No way??? along with a few extra words from George Carlin’s list. Now, the Silicon Valley Photovoltaic Development Center can help those aspiring start-ups and as well as incumbent manufacturers make those process changes. SVTC, a long-time process development foundry for the semiconductor industry, is about to provide that same service to photovoltaic markets through their newly launched Silicon Valley Photovoltaic Development Center (SVPDC). The SVPDC has released a spate of announcements of late:
  • Roth & Rau will outfit the center with a 5MW 6??? silicon wafer turnkey solar pilot line.
  • JA Solar signed a LOI to locate its North American R&D operations in the SVPDC
  • The city of San Jose and the California Employment Training Panel Fund will invest ~$200K in equipment and training funds to help situate the SVPDC in a new clean-technology business park.
  • And other unnamed solar start-ups have agreed to use the center for their solar development efforts.
The center provides the building, clean rooms, labs, equipment, and a baseline PV cell process to aspiring and existing PV manufacturers – allowing competitors to work side by side while keeping IP safe and separate. Scott Marquardt, VP of Sales, Marketing and Business Development at SVTC said, “Trying to do modifications on the fly on an existing silicon line is very difficult – that’s what the center provides.??? “Real commercialization is our sweet spot,??? he added. The SVPDC will also be able to provide process development services to non-silicon PV firms as well as packaging and possibly help with testing and certification.

Tesla to Unfurl Sedan Strategy With Schwarzenegger

Michael Kanellos: June 30, 2008, 3:20 AM
Tesla Motors will later today announce a "significant development" in their plans for a four-door passenger sedan, and the special guest is Arnold Schwarzenegger. That could mean that Tesla will manufacture a significant portion of the car in California. Tesla, like a lot of green tech companies, has shopped around its plans for a factory to various states. The company talked to New Mexico and Michigan. In these situations, whichever state gives the biggest incentive package wins. Governor Arnold has been trying to get more green companies to locate in California and Tesla happens to be located in San Carlos, California. Alternatively, Tesla may just announce the formal name of the car (right now it is code-named White Star) and a more firm launch date. Right now, the car is targeted for production in late 2010, according to the press conference announcement sent out by Tesla. Earlier, the company talked about production starting possibly in late 2009, so it sounds like White Star has been pushed out a bit. So why would Arnold be there? To pick up his Roadster. He's on the list for one. I actually ran into Arnold in July 2006 for the unveiling of the prototype in Santa Monica. Arnold rode in the car, got out, and pronouced it "fantastic." He then got into a huge SUV with a bodyguard and drove away. So much for green. I got to ride in the car after Arnold. It was pretty fantastic. The press conference starts at 11:20 PST.

Tesla to unfurl sedan strategy with Schwarzenegger

Michael Kanellos: June 30, 2008, 3:15 AM
Tesla Motors will later today announce a "significant development" in their plans for a four-door passenger sedan, and the special guest is Arnold Schwarzenegger. That could mean that Tesla will manufacture a significant portion of the car in California. Tesla, like a lot of green tech companies, has shopped around its plans for a factory to various states. The company talked to New Mexico, Michigan. In these situations, whichever state gives the biggest incentive package wins. Governor Arnold has been trying to get more green companies to locate in California and Tesla happens to be located in San Carlos, California. Alternatively, Tesla may just announce the formal name of the car (right now it is code-named White Star) and a more firm launch date. Right now, the car is targeted for production in late 2010, according to the press conference announcement sent out by Tesla. Earlier, the company talked about production starting possibly in late 2009, so it sounds like White Star has been pushed out a bit. So why would Arnold be there? To pick up his Roadster. He's on the list for one. I actually ran into Arnold in July 2006 for the unveiling of the prototype in Santa Monica. Arnold rode in the car, got out, and pronouced it "fantastic." He then got into a huge SUV with a bodyguard and drove away. So much for green. I got to ride in the car after Arnold. It was pretty fantastic. The press conference starts at 11:20 PST.

Exit Here, Mind the Gap: Part I

Daniel Englander: June 30, 2008, 12:07 AM
The second quarter sucked. For a lot of reasons. If you were a VC, it's more than likely you woke up once or twice in a cold sweat wondering if those lignin-to-hydrogen and supercapacitor companies you funded were really the best place to put $80 million. And maybe for a brief moment this Saturday morning, you cracked open the The New York Times business section, your eyes wandering past the picture of the fat lady with the milk jug, until you settle on a story that made you mix tears of pain with your Wheaties. The second quarter was the first time since 1978 that there were no venture-backed IPOs. The first quarter was no picnic either, with only five VC-backed companies making their debut on the public markets. So there are a few well-trod reasons why this is probably the case: the markets continue to death spiral as big investors sells off and small investors either hold tight or move money into safer harbors, like commodities; the Fed has made some noise about uncertainty over inflation, halting the orderly retreat in the Federal Funds Rate to two percent, with rate hikes possible in the future; tightening credit markets and lots of distrust has moved money out the banks and under the mattress; and, generally, with the economy at its worst point in recent memory, who's got time to pop open a bottle of Perrier-Jouet and go bang the hell out of the NASDAQ bell. Come to think of it, if you haven't moved all of your money out of the NASDAQ and into oil exploration equipment manufacturers and defense contractors, you might as well just give up right now. Just kidding. Kind of. But macroeconomic problems aside - because, really, when was the last time you talked to a VC who cared about macroeconomic problems? - it's probably important to think about whether the absolute lack of exits has endogenous origins. Are VCs more focused on investing in companies that can grow or companies that can be sold? Or, as Gary wonders, are the companies VCs are investing in truly disruptive game-changers, or are they merely incremental innovators? The former being companies that could come into their own as real competitors on the public markets, the latter likely relegated to acquisition and roll-up into Dow Corning, Bosch, or another similarly situated industrial conglomerate. But I say that like it's a bad thing. It's not. But it may be sign of a larger problem. VCs, especially greentech VCs, are investing in companies that are "fun and appealing to them but Wall Street doesn't care," says Paul Kedrosky. Those companies include the n+1 solar company with the highly-efficient solar cell and the other other company working on fast-charging technology for Li-Ion EV batteries. The VC herd mentality may end up doing them in in the end. When one firm invests in a cell company, so do the next nine. Same with cellulosic ethanol, same with fuel cells, and on and on. Of the 426,718 solar companies funded in 2007, maybe four represent real value based on a marketable innovation. There's also the problem that greentech companies take a long time to build. I suspect a lot of investors came into this market in late 2006, dropped $5 million in an A round, and thought they were on their way to success. Five months later they get a call asking if they want to follow on with another $65 million to fund the design of the production process. Excuse me? What? Oh, yeah. We've Got To Build A Factory To Build Our Product. While you were busy downing your favorite aspirin and Lipitor cocktail, the nature of VC investing changed. And with it, the timelines to exit. Some VCs worry that the end of exit opportunities through the public markets will mark the end of the VC industry. I disagree. I think some VCs have started, ever so subtly, to craft companies in ways that exploit the value of their product, and not necessarily the value of their company as a whole. In our next installment, we look at how those product-centric companies are fairing in the frothy M&A market. And by frothy, I mean 1/frothy. Oh, and just to make sure we're all on the same page. Does anyone remember the last venture-backed greentech IPO? I think it was Orion Energy Systems, which debuted on the NASDAQ around Christmas 2007 and raised around $80 million. Before that were the dueling IPOs of EnerNOC and Comverge in May and April 2007, respectively. Before that? First Solar in 2006.

With SVTC, Getting Into Solar Biz Just Got Easier

Michael Kanellos: June 26, 2008, 12:52 PM
First, Applied Materials made it easier for individuals to get into the solar business by offering to build them ready-to-run factories. Now, SVTC Technologies, at one time a division of Cypress Semiconductor, is getting into the act. The company, which offers research and design services for chip makers, will now offer prototyping and research services for solar companies. Need a lab to crank out samples of your latest silicon cell so that Applied will approve your request to buy a factory to start popping out said cells in mass production? SVTC will do it for you. China's JA Solar is already a customer. Germany's Roth and Rau will help SVTC build out its solar lab and testing facilities. In all, SVTC's solar center will cost between $20 million and $30 million and be capable of popping out 5 megawatts of panels. Traditional solar companies should take note. This is exactly how Taiwan and later Singapore, South Korea and China, became major players in semiconductors. Equipment makers and research institutions began to help them--for large sums of money--develop and subsequently fine-tune their factories. A number of Asian companies also recruited well-known U.S. academics to serve on their technical advisory boards. Although the chip industry remains a multibillion dollar concern, most companies are looking for the next growth market. The race to become a leader in LCD TVs is over. Solar is the next frontier. Look at the resumes of execs behind companies like Signet Solar. They are all old chip guys. And speaking of which, expect to see TV makers like Samsung to start to unveil solar plans. Making LCD TVs is similar to making amorphous silicon solar panels. Applied, in fact, sells similar equipment to both markets. And let's not forget, SunPower is a division of Cypress. Don't say I didn't warn you.