Editor's Choice: Tesla unveils sleek new electric car

Tesla Motors hopes to boost the market for electric cars with its unveiling yesterday of the prototype of the much-anticipated Model S sedan. The new four-door vehicle will cost $49,000, far less than Tesla's original $109,000 roadster.  

The Silicon Valley company is now accepting orders for the Model S, even though production isn't expected to begin until late 2011. Tesla hopes to receive a $350 million federal loan to build an assembly plant in Southern California. Last year, the federal government made $25 billion in low-interest loans available to automakers to develop new technologies like electric cars.

Chief executive Elon Musk introduced the sleek Model S, which gets about 160 miles on a single charge. Another version of the car will get up to 300 miles. The car battery has a life expectancy of seven to 10 years, said Musk, who co-founded PayPal and is also CEO of rocket-ship maker SpaceX. Only about 300 of the current two-seat roadsters have been delivered to date. Tesla hopes to ramp up production to 20,000 per year of the new sedan by 2012.

The Model S has a top speed of more than 130 miles per hour, Musk said, and can sprint 60 miles an hour from a standing start in less than six seconds. The roadster can reach 60 miles per hour in four seconds.

Tesla had originally planned to build the Model S in New Mexico, lured by incentives offered by Governor Bill Richardson which included tax credits and a promise to buy 100 vehicles. That plan changed, however, when California Arnold Schwarzenegger, who owns a Tesla Roadster, wooed the automaker. In September, Tesla said that it would instead build the factory in San Jose, where incentives included tax credits and a free 10-year lease. 

Though the current plan is to relocate to Southern California, San Jose Mayor Chuck Reed still hopes to keep some of the business of the Silicon Valley company. He's encouraging Tesla to keep its research-and-development division and headquarters in San Jose. 

"The plan was to do everything in one location," said Reed. "But that plan fell apart when the credit markets collapsed." Musk has invested $55 million of his own money. He amassed  his fortune when he sold PayPal to Ebay. Other investors include Google co-founders Larry Page and Sergey Brin.

Tesla applied for a federal loan when sufficient venture funding didn't materialize. Federal programs favor projects located on unused industrial sites rather than new construction. Southern California has a large number of abandoned aircraft factories and other such spaces.