Tesla IPO a Hot Ticket!

A good buy – but don’t bet the baby’s college education on it!

2012 Model S

Investors grab Tesla Motors IPO

Tesla Motors will offer up its shares to the public for the first time on Tuesday, testing investors’ faith in a company that has proven it can make functional and stunning electric cars but has never had a profitable quarter.

PayPal founder Elon Musk’s seven-year old auto company lost $55.7 million last year and $260.7 million since its inception. The company has performed so poorly from a financial standpoint that Musk recently said he lost his entire personal fortune on Tesla.

But investors are giddy about the Palo Alto, Calif.-based automaker’s initial public offering, prompting Tesla on Monday to increase the number of shares it plans to offer by nearly a fifth to 13.3 million.

Tesla, which will trade on Nasdaq under the symbol “TSLA,” priced its shares late Monday at $17 each, above the target range of $14 to $16. That allowed Tesla to raise more than $226 million in the IPO.

Much of the excitement is pegged to Tesla’s launch of the Model S, an electric sedan that the company says will sell for a minimum of $50,000 in 2012. That’s much more reasonable and practical for most consumers than the vehicle that Tesla currently sells, the $100,000 Roadster sports car.

The electric automaker plans to acquire a plant where it will produce 20,000 new Model S sedans each year starting in 2012. That’s a significant increase from the 1,063 Roadsters it has sold — total. But until 2012, Tesla said it will continue to pile up hefty losses.

“Investors that are interested in Tesla know that it’s going to continue to burn cash until it gets Model S into commercial production,” said Matt Therian, an analyst at IPO research firm Renaissance Capital in Greenwich, Conn. “Tesla investors are really looking out to 2012, with their investment very much tied to whether they think 20,000 is a conservative or an aggressive number.”

There are many reasons to believe in Elon Musk & Co. Musk made his name — and fortune — on the success of electronic payment company PayPal, which was eventually acquired by eBay (EBAYFortune 500). And his space exploration technology company, SpaceX, earlier this month launched the first successful, privately funded spaceship with the capacity for human space transport.

Tesla doesn’t just have the backing of the successful Musk. Earlier this year, Tesla borrowed $465 million from the Department of Energy to fund production of the Model S

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4 Responses

  1. I know a man who has already purchased one and is looking to create electric charging stations with a convenience store attached.

    I would think they would try to get a Tesla in every garage, but @ $50k, that doesn’t seem to be the plan.

    • I believe the reason Toyota is interested is the possibility of mass production getting the price down to something your average consumer can afford. I would have t believe with their manufacturing wherewithal, they could produce these in the $25,000 range by 2015.

  2. I’m all for electric vehicles, but I wonder what has happenned behind the scenes to “allow” the production and sale of these vehicles in the US now. The technology existed a decade (or longer) ago, and it’s my understanding that European vehicles are running at 50 and 60 miles a gallon right now.

    I’ve got a DVD in my Netflix queue: “Who Killed The Electric Car?” Anybody seen it?

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