Tesla has announced that its Model S saloon is being withdrawn from the Automotive X-Prize competiton.

In an interview with Stuff,  Ricardo Reyes, Tesla Motors' vice president for communication, said, “We have discussed it with the X Prize guys and agreed to put a car in the demonstration division instead [of the competition]...” He went on to say “The competition division is amazingly good but the demonstration division is one that people shouldn’t look past. It’s more geared towards actual car manufacturers and it’s a better fit for us.”

The company also said that it intends to focus it's efforts on moving the model S into production.

From an outsider's perspective there would seem to be two broad possibilities here: (A) The company feels that 5 million dollars(the prize in the Mainstream category) and some publicity, may not weigh that heavily in the balance against the possibility that failure might tarnish the Tesla image.  This is particularly true of a company that recently pulled $50 million in investment from Daimler, $465 million from the U.S. government, and gets all the free media it wants, anyway.

Or (B) Tesla feels that it is now in an absolute death race to produce the Model S ahead of the rising tidal-wave represented by Nissan/the Volt/Fisker/ etc., etc.,  and no amount of prize-money or publicity is worth even a tiny iota of distraction from that goal.  With such an ambitious effort by what is essentially still a start-up company, there may be potential issues behind the scenes which management is desperately struggling to overcome, and supporting what is essentially a competitive race team may be stretching the resources too thin.   Any delay in the Model S rollout at this point would likely breed discontent among investors and potential customers, and might cede whatever advantage Tesla currently has to the competition.

The Tesla Model S Saloon is currently scheduled to be in showrooms by mid 2011 for  $57,400 ($49,900 in the U.S. after $7,500 federal tax credit).

[SOURCE: Wired]