By on November 22, 2009

In need of a charge?

Reuters reports that Tesla is planning an Initial Public Offering, after postponing planned IPOs in 2008 and 2009. Tesla reportedly hopes to capitalize on the recent success of battery developer A123 Systems, on the assumption that the A123 IPO has raised interest in electric auto firms. According to one of Reuters’ sources, Tesla’s IPO filing could be made “within days.” And the Silicon Valley startup, which currently has only one product, the $100k+ Tesla Roadster, will most likely have to hurry. Both Nissan and General Motors plan to enter the electric car market this year, marking the initial entries by established auto OEMs into the American EV market. Both of their initial products, the estimated $30k Nissan Leaf and the estimated $40k Chevrolet Volt, will cost considerably less than Tesla’s estimated $50k Model S sedan and will beat it to market by at least a year. Acquiring funding after cheaper competing models go on sale could be extremely challenging for a boutique automaker like Tesla.

Though the motivations for a quick Tesla IPO are clear, the odds of success are far from guaranteed. A123 has major contracts with established OEMs, whereas Tesla has only a minor electrification deal for Daimler’s dying Smart brand. And despite a soaring stock price after its IPO, A123 has come down to earth after Chrysler (an A123 customer) essentially shuttered its EV development. Though Tesla is largely insulated from such OEM volatility, the Smart brand’s struggles could lead to the cancellation of one of its few source of revenue. Meanwhile it still has yet to build its first plant and is being kept alive by $465m in Department of Energy loans. In fact the best argument for a successful Tesla IPO is the popularity of its electric roadster among the Silicon Valley elite. IPOs are rarely rational phenomena, and local homerism could just provide Tesla with sufficient capital to take its Model S to market. After all, GM’s IPO strategy doesn’t seem much different, as it seems likely to make an offering prior to the launch of its own Volt EV. Tesla could just be a canary in the EV-based IPO strategy coalmine.

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5 Comments on “Tesla IPO in the works?...”

  • avatar

    I think Tesla’s main attraction to investors is its success in sucking on the government teat.

    An investment in Tesla is a gamble. But the way it is set up, private investors can piggyback on the government loans. Yet if Tesla succeeds big, they don’t have to share the profits with the government. A private investor can leverage their investment. In Silicon Valley, that’s attractive.

    I still will never invest in Tesla. But I’ve talked to people who would. For that very reason — the government money pouring into electric cars.

    Tesla already has hold of a teat and is sucking as hard as it can. Others of us have trouble getting even a drop of milk from the old sow. Which company would you invest in?

  • avatar

    That’s one I just have to consider.  I’ll put it on my “A” list, right after I lock in a large position of Amalgamated Fuzz preferred.

  • avatar

    I doubt they have made any ‘profit’ on the Roadster (they have sold what 750 or so).

    They have probably received all the deposits on the Model S from the suckers customers they are going to, so they need to go out get money from an IPO to keep operating before someone figures out they don’t have the economies of scale to make money.

  • avatar

    Might be profitable to buy a coupla thousand shares and dump out of it in a coupla days.

    Certainly no long term potential, or any profits. But, since the market is merely a casino where your concierge makes $500K, and will empty your wallet if you turn your back, why not? 

    There’s still idiots out there buying oldGM stock, so a Tesla IPO should be a slam-dunk. 

  • avatar

    There is no way that Tesla will succeed, it is just a company with better Kool Aid than Fisker.  I have to admire the gaul of Musk, he has an ego that won’t quit.  Too bad cars can’t run on his ego, we’d solve the energy crisis tomorrow.  I still cringe every time I use Pay Pal that this spawn of Musk also.  I wonder who will play Musk and/or Fisker in Tucker II?

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