A Letter to Customers from Ze'ev Drori

By Ze'ev Drori, President and CEO

December 27, 2007

The following is a letter that was sent to Tesla Roadster customers on December 21 to review key developments in the Roadster program. These updates were first revealed a week prior in a customer town hall meeting [ http://www.teslamotors.com/media/updates.php ], which was hosted by Chairman Elon Musk and President and CEO Ze'ev Drori at Tesla's corporate office. More than 100 customers attended, either in person or via conference call. As he notes at the end of the letter, Ze'ev plans to contribute more to the Tesla blog in the new year.

An Update from Tesla Motors President & CEO Ze'ev Drori

"What are your goals for Tesla Motors?" That is the most common question I have received during my first few weeks on the job, and I have answered the question very simply: to put the Tesla Roadster on the road as soon as possible. There are many other things to get excited about for the future of this company, but nothing is as important as bringing our first product to market.

As a consequence of this intensity of focus, I know that we have not been communicating with our customers as frequently as you have grown accustomed to. As the first step in a renewed commitment to keep customers informed of our progress, we held a town hall style meeting on December 12 and invited all Tesla customers to attend in person or join the discussion over the telephone. An audio recording of the event is available on our website [ http://www.teslamotors.com/media/updates.php ].

If you haven't had a chance to listen to the audio recording, the summary below highlights some of the new and important pieces of information shared with the group:

Transmission status – The transmission is the primary source of our delay and the key focus of our activities. We continue to refine and validate other aspects of the car along the way, but the gating factor to get into full production is the availability of a reliable, tested transmission that will last many miles.
It may seem like a simple thing, but a durable transmission is actually very difficult to engineer in a high performance EV application. We have had several experienced suppliers try in the past, but now we have the appropriate level of internal resources combined with external expertise to ensure we get it right this time. We have also adopted multiple, parallel paths so that we are not dependent on one approach.

To help speed delivery of cars, we will begin production in 2008 with an interim transmission design. These transmissions will meet high standards for reliability and durability, but the car will not meet the original performance spec for acceleration, reaching 60 mph in 5.7 seconds instead of the promised 4 seconds. When the final transmission is ready, we will retrofit all cars, at Tesla's expense, to meet the promised performance specifications.

It should be noted that the interim design is one we have a lot of experience with, having accumulated more than 100,000 miles of usage in our fleet. We have found these transmissions to be highly reliable and durable. It should also be noted that this was the transmission fitted to VP10 for the test drives we did with all of the top U.S. car magazines in early December. I think you will enjoy the driving experience as much as they did, even with this interim solution.
Production schedule – Our goal is to start full production of Tesla Roadsters in spring 2008. Once production has begun, the ramp rate of the production volume will depend on how quickly our suppliers can ramp production of parts and how quickly Lotus can increase the rate of the production line. Because of this dependency we don't yet know when each car will be built or how many cars will be completed in calendar year 2008. We plan to accelerate production until all 2008 orders are filled, although we expect some number of cars to be delivered in early 2009. We will provide more information about production schedules and volume as our plans develop.

Prior to entering full production, we will build a limited number of production vehicles through the early part of 2008. This will give us the opportunity to practice our production readiness with our manufacturing, supply chain, and customer service capabilities.Car number one, which belongs to Chairman Elon Musk, has already been completed and will be shipped to California as soon as the DOT (Department of Transportation) paperwork is completed. All FMVSS (Federal Motor Vehicle Safety Standards) crash tests have been completed successfully. There are a few other items remaining for complete DOT certification but it should be ready soon. Look for a blog with more details on this topic from Mac Powell, Vice President of Vehicle Integration, soon.
Commitment – The management and employees of Tesla Motors remain completely committed to delivering quality cars to everyone who has reserved a car. During the call, Elon expressed his own personal commitment to support the company and also stressed that the company is not for sale. We intend to continue to operate as an independent company producing great electric vehicles. Elon has written a blog on this subject that you can read on our website [ http://www.teslamotors.com:80/blog2/?p=54 ].
Range – In September, Vehicle Systems Engineer Andrew Simpson updated you about the driving range [ http://www.teslamotors.com:80/blog4/?p=60 ] of the Tesla Roadster. In this blog he explained some of the preparation that took place to ready a car for the required EPA range tests. He then revealed the results of the EPA range tests as well as a number of real world range tests that he has performed. Since then, the independent lab that performed the test (Automotive Testing and Development Services, Inc.) informed us that they made a small error in the testing procedure (they entered some incorrect parameters into the calibration of the dynamometer), resulting in an overstated EPA range figure.

A recent re-test resulted in an EPA combined range of 221 miles, which we believe to be an accurate result. Since the error was in calibration of the test equipment, and not due to the actual efficiency of the car (which was unchanged from the first test), the real world range numbers are unchanged. We have seen as high as 267 miles per charge in slow city driving to as low as 165 miles in aggressive highway driving. While the EPA range test is required for certification and labeling on new cars and a good benchmark, we feel the real world numbers are a better reflection of what you might see in day-to-day use.

We will need to re-test the car prior to full production, so the current test should be considered an estimate. The transmission is an important factor in determining drivetrain efficiency, so the final design may impact the result in either direction slightly.

In the near future I am hoping to share more with you about me and my thoughts on the company and its future. I also look forward to getting to know many of you. You are all part of an incredible journey that I am now privileged to be a part of.

Ze'ev Drori
President & CEO
Tesla Motors