Silicon Valley is the land of dreams. Here's Elon Musk's dream: His electric-car startup has hundreds of millions of dollars in government loans and a bright financial future. Too bad that's all in his head.

In an email to customers, Musk announced that Tesla Motors, once seen as the brightest hope of the electric-car industry, was set to receive $350 million from a Department of Energy loan program in a matter of months:

Regarding funding, I am excited to report that the Department of Energy informed Tesla last week that they expect to disburse funds from our $350M Model S loan application within four to five months. The Obama administration has thankfully made it a top priority to move quickly on the Advanced Technology Vehicles Manufacturing loan program, as this will both generate high quality jobs in the near term and lay the groundwork for a better environment in the future.

A Tesla flack forwarded the email to journalists, and then had to send out a hasty correction:

The newsletter contains an on-the-record statement from Elon about the expectations of the Department of Energy loans, but it's important to note that we have NOT received final confirmation from the DOE that we will receive funds. None of the 75 applications have received final approval. However, we are in the later stages of the loan application process, where the DOE is evaluating Tesla's financial viability and technical merits. The DOE is doing its due diligence, and we are very optimistic about a relatively expedient timeline for disbursal of funds.

Here's Tesla's catch-22: The government will only loan Tesla money if bureaucrats deem it financially viable. And it will only be financially viable if it gets the loan.

In the mind of an entrepreneur like Musk, this is a mere detail. The money is as good as his, and the only hangup is getting everyone to share his vision.

In fact, Tesla is far from profitable. Tesla has already raised prices on existing orders for the company's $109,000 all-electric Tesla Roadster, an admittedly nifty car which accelerates from 0 to 60 miles per hour in four seconds or less. Musk justified the move by claiming the company wasn't making a profit on current orders.

And yet, in the subject line of the email, he claimed "Tesla to be Profitable by Mid Year," and wrote:

The $40M financing round completed in December was twice the amount Tesla needed to reach profitability. Moving forward two months later, we remain on track with our cost reductions and production ramp, so it appears highly likely that Tesla will meet the goal promised to those investors of becoming profitable by mid year.

Valleywag reported in October that Tesla was down to $9 million in cash. Tesla insiders tell us that it has not, in fact, completed the $40 million in debt financing it promised to raise in November. Musk recently told customers at a town-hall meeting that the company almost ran out of cash again in December because of delays in running the money.

And a back-of-the-envelope estimate shows that Tesla is far from profitability. The company has 300 employees; estimate $120,000 per employee, including benefits, and you get $36 million in annual staff costs alone. Tesla is currently producing cars at a rate of 1,000 a year, meaning that it must make $36,000 per vehicle just to meet payroll expenses. It is nowhere close to making that much money on the Roadster, if it is making money at all. And that's not counting the cost of Tesla's fancy new showrooms; it has leased space for stores in Chicago and London, and has plans for four more.

The only way Tesla might now generate cash is by taking deposits for its Model S sedan, a mass-market car it hopes to produce in far greater volumes than the Roadster. It plans to unveil a drivable prototype next month. But it has nowhere to build the car, having cancelled plans for a factory in San Jose. And unless Tesla's government loans come through, it has no source of funding.

The only real source of financial viability Tesla now has is the power of Elon Musk's imagination. It should not be discounted: A recent GQ feature detailed how he dreamed as a 10-year-old in South Africa of traveling to space, and he now has his own space-rocket company, SpaceX.

If he can persuade government officials to back him, despite Tesla's dreadful figures, he might have a shot. If he can persuade customers to put down money for a car he currently has no means of delivering, he might have a shot. One can't fault Musk for dreaming. That's every entrepreneur's job. But his habit of talking about dreams as if they were reality could be what ultimately dooms his vision.

(Photo via Treehugger)