Tesla Motors hits the brakes amid credit crisis

The credit crisis has hit the country's leading electric car maker.

Citing "extraordinary times," Tesla Motors, maker of the battery-powered, $109,000 Roadster, said Wednesday that difficult market conditions were forcing it to delay production of its next-generation vehicle, close two offices, lay off an unspecified number of employees and replace its chief executive.

For now, the San Carlos, Calif.-based company will focus on cutting costs and making its current vehicle profitable, said Darryl Siri, Tesla's head of sales and marketing. "Because of the fundraising environment and capital markets, we're going to focus on making the Roadster a positive cash flow, core product," he said.

Effective immediately, the company's chairman, Elon Musk, is taking on the chief executive's post, while the outgoing chief executive, Ze'ev Drori, will stay on as vice chairman.

Tesla has been held up as a leading light in the clean technology start-up world, with its product (the Roadster) appearing on dozens of magazine covers and its chairman, Musk, appearing on "60 Minutes" less than two weeks ago. As a start-up, however, Tesla is particularly vulnerable to the vicissitudes of increasingly tight credit markets.

"Tesla and about a million other companies are in the same place," said Alexander Cappello, chairman and chief executive of Cappello Capital Corp., an investment bank specializing in high-growth companies. "There's virtually no money available from banks. There's no money for buyouts. There's no money for issuing debt. There's just no money."

Before delivering its first production Roadster in February, Tesla raised about $140 million, mostly from venture capital firms such as VantagePoint Venture Partners. To help finance its next project -- a $60,000, four-door electric car called the Model S that it plans to build in San Jose -- Tesla once again looked to capital firms for an additional $100 million or so.

Wednesday's announcement seems to indicate Tesla is having difficulty reaching those goals. "It's not an understatement to say that nearly every business will be impacted by what has unfolded in the past weeks," Musk said in a statement on Tesla's website Wednesday. "This is true for Silicon Valley as well."

Venture capitalists need access to credit to finance the companies they invest in. They also depend on credit markets to lubricate the mergers and acquisitions that allow them to profit from their investments. Those options are practically nonexistent now.