LOS ANGELES -- Electric-vehicle maker Tesla Motors opened its first dealership on Thursday, May 1, here, at one of the busiest intersections in the city.

Close to the crawling 405 freeway and the congested corner of Santa Monica and Sepulveda boulevards, the Tesla factory store makes a potent statement for gridlocked Angelenos to buy an electric car.

Of course, Tesla needs to get its two-seat roadster into serial production to give its dealership something to sell. The company has 600 sold orders and a waiting list for 400 more, but only four production cars have been built. A development glitch with the Magna two-speed transmission has forced a rapid redesign of a one-speed transmission in collaboration with Ricardo Inc.

Built in England

For the next several months, until the new transmission is ready, Teslas will be built on a slowed-down schedule by Lotus Cars Ltd. in England. Early-build cars will later have their transmissions replaced in a two-hour fix.

By December, Tesla hopes to have 300 cars built. At that time, serial production of 150 cars a month should begin, said Darryl Siry, Tesla vice president of sales, marketing and service.

Next year, Tesla hopes to build its $109,000 roadster in knockdown form in northern California, with the rolling chassis shipped from Lotus, Siry said.

The steep cost of having its European manufacturing base in euros and pound sterling has made business difficult. Plus, because the hefty 1,000-pound battery pack is assembled in Northern California, the logistics of putting a manufacturing base there makes sense.

The Tesla store looks more like a cool ad agency or hip restaurant than a car dealership. Its industrial look features poured concrete floors, exposed beams and ductwork, mirrored front glass and planter boxes filled with horsetail stems. The service department is out in the open to allow customers to see what is going on with their cars.

Store cost $2 million

ENLARGE Tesla's dealership cost about $2 million to build. Photo credit: MARK RECHTIN

The 10,000-square-foot dealership cost about $2 million to create, including the dismantling of the two adjacent buildings to make one showroom, Siry said. He declined to give the cost of rent.

Being a factory store, the employees work for Tesla. The sales staff is salaried, not commissioned.

Company founder and financier Elon Musk defended the concept of factory stores.

"The Apple Stores have worked out well. It's a fantastic consumer experience," Musk said. "We wanted a nontraditional automotive experience, and we have it."

The next Tesla store will be in Menlo Park, near the company's Silicon Valley headquarters. It should open by summer. Tesla is looking to add four stores in New York, Miami, Seattle and Chicago by the first quarter of 2009, Siry said.

After that, expansion will be based on market demand and creating service points. Other logical areas could include Washington, D.C., Durham, N.C., and Boston.