Silicon Valley startup Tesla Motors, which makes high performance electric cars, including the electric sports car Tesla Roadster, is now feeling the heat of the ongoing financial crisis. It announced earlier this week that it would close an engineering facility in Michigan, which would also mean layoffs for an unspecified number of workers, and delays to its next vehicle, a luxury sedan called the Model S that has been awaited by the market for since some time now.

Having changed four CEO's, the company's reins will now once again be taken over by Elon Musk, Tesla's chairman and a leading investor, who funded the company almost single-handedly earlier. To make itself the company now plans to change its focus to selling its Tesla Roadster sports car, and motor battery technology.

In its official blog, Elon Musk posted that given the extraordinary times, Tesla under his command has decided to adopt a ''wise course of action'' that will see it focus on two revenue producing business lines - the Roadster and powertrain sales to other car companies.

He said that in the Roadster, Tesla has a unique product with a large order book that continues to grow, and that the powertrain business is profitable and growing rapidly. He said the company aims to be cash-flow positive within six to nine months.

Musk said that Ze'ev Drori, the erstwhile CEO whom he replaces, will stay on the board of directors as vice-chairman. Calling for a ''special forces philosophy and consolidation of operations'', he said he would raise the performance level so high that there would be a ''modest reduction in near term headcount'', and some more on account of consolidation of operations. He said the company would ramp down and close its Rochester Hills office near Detroit.

In his blog post, Mush says that the company remains committed to the development of its next generation vehicle that would be unveiled in early 2009. ''However, we are going to reduce activity on detailed production engineering, tooling and commitments to suppliers until our department of energy loan guarantee becomes effective'', he says.

Apparently, the department of energy loan guarantee would cover most of the Model S programme at a very low cost of capital compared to raising equity financing in the persistent bear market. Musk says the loan funding can only be drawn down after Tesla receives environmental approval for its new 89-acre consolidated headquarters in San Jose, expected sometime around the second quarter of 2009. All said and done, that means a delay in start of production of the Model S of roughly six months to mid-2011.

Tesla changed the image of the electric car with its Roadster, on account of it being a powerful sportscar that is fun to drive. However, with its' price tag of $109,000 or approximately Rs53 lakh, the car is out of reach for most people.

Its proposed luxury sedan, the Model S, was reported to have a price tag of $60,000, making it affordable by a larger chunk of the population, though it would still not be for popular consumption. Originally scheduled for production in 2009, the car's date with the assembly line is now hovering around mid-2011, around the same time that auto behemoth General Motors (GM) plans to launch its own electric sedan, the Chevrolet Volt that will ostensibly cost around $40,000.

With more automakers looking at electric vehicles in their product line up on account of the lessons learnt from the recent spike in oil prices ($147 per barrel as of July 2008), most would be rolling out viable models around the same time. That would heavily intensify competition of Tesla, as it would lose its first mover advantage.

Masking the pain, Musk's post says that the bright side to the delay would mean extra time spent on refining the vehicle design and powertrain technology, ''so the car will end up being slightly better.''