By on January 29, 2010

Here’s some gutsy news from one of the gutsier companies around. Tesla filed papers for an initial public offering (IPO) today, hoping to raise up to $100 million. In its Form S-1 registration statement with the SEC, the Silicon Valley start up said the stock would be issued “as soon as possible”. That part is not very surprising, coming on the heels of securing a $465 million loan from the DOE to help build the Model S. But deeper in the that filing comes a couple of juicier facts: Tesla has lost some $236 million so far, and plans to kill the Roadster, its only product on sale, in 2011.

Tesla has been selling the Roadster profitably in the past year, so why kill the EV? Because there’s no one to build it after next year. Apparently Lotus is shutting down production of the current generation Elise, on which the Roadster is heavily based. Them’s the the breaks when you outsource production of your car. According to a report in Autopia/Wired:

“We do not plan to sell our current generation Tesla Roadster after 2011 due to planned tooling changes at a supplier for the Tesla Roadster,” the company wrote in the filing.” The Roadster is built by Lotus, so presumably Tesla is talking about changes at the British automaker’s factory in Hethel, England, but we can’t confirm that because Tesla spokesman Ricardo Reyes declined to comment.

Tesla plans to replace the Roadster, but not “until at least one year after the launch of the Model S, which is not expected to be in production until 2012.”

That represent a major risk factor in Tesla’s income stream, or lack of it. If there are any hitches and delays in the start-up of the Model S, Tesla would face an extended dry spell without any income to speak of. From their filing:

“As a result, we anticipate that we may generate limited, if any, revenue from selling electric vehicles after 2011 until the launch of the planned model S…The launch of the Model S could be delayed for a number of reasons and any such delays may be significant and would extend the period in which we would generate limited, if any, revenues from sales of our electric vehicles.”

And speaking of the Roadster, the SEC filing contains an intriguing detail regarding its profitability: In the financial data summary Tesla says it had a profit margin of 8 percent — not anemic but not good. However, that entire margin seems dependent on zero-emission-vehicle credits, which will not be available by the time the Model S is commercially available.

Since the Roadster was arguably unprofitable even at a drive-away price of between $125,000 and $140,000, it would seem that some unspecified efficiencies would have to be part of the success story for a vehicle with an MSRP touted to be half that — $57,000 before the federal tax credit.

Elon Musk is a risk taker and likes to live on the edge. Tesla’s precarious state should keep things from letting life get dull for him, as well as us. The only remaining question is, do we file this under the Tesla Birth Watch, or revive the Tesla Death Watch?

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28 Comments on “Tesla To Go Public; Kill The Roadster...”


  • avatar

    Soooo… Tesla Death Watch, Mark II?

    I think they will be just a footnote, not have their own page in history.

  • avatar
    Robert.Walter

    I’m undecided … If used in an ad campaign, would this photo help or hurt the sales possibilities or the Toureg, Prius, or Teslas?

  • avatar
    Robbie

    The *idea* behind the roadster – a totally new driving experience with crazy acceleration based on battery technology improvements – may very well be viable in the long run. For a sedan, there is little hope of viability.

  • avatar
    CarPerson

    To my eyes, the stars are not in alignment on this.

    My nose tells me the insiders are cashing out and heading towards the exits after creating a pool of money they can pretty much drain.

    My gut tells me to cover my wallet with both hands.

  • avatar
    CyCarConsulting

    Can you say Dale Car ??

  • avatar
    Robert Schwartz

    Sell.

  • avatar
    werewolf34

    Let the fleecing being. The Tesla guys are scumbags

  • avatar
    John Horner

    Remember how the Segway was going to change personal mobility?

  • avatar
    criminalenterprise

    I hope we get a terribly scandalous end like the one they gave Johnny Z.

  • avatar
    Daanii2

    What a coincidence. Four years ago I filled in a form with Tesla to get updates about the Roadster. Never heard anything from them.

    Then yesterday I get an email from some saleswoman at Tesla “reaching out” to me. Then today she calls and leaves a phone message, again “reaching out.”

    Now I see that Tesla plans an IPO. Could that explain the saleswoman’s call? Could it be that their sales pipeline has dried up? Or could they be trying to prime the pump for their IPO?

    Interesting to see what happens with Tesla in the next year or two. I’ve seen a few Tesla Roadsters advertised for sale as used cars. New or used, I’m not buying.

    • 0 avatar

      I’d love to own a Roadster, although unfortunately buying one isn’t even close to my financial league :-(.

      But I can’t help but notice that if you search completed items on eBay, they are not selling. Most of them got no bids. The only one that did get bids didn’t make its reserve, with bidding topping out at $75k.

      I was curious to know how that compared to a comparably prized, near-new exotic. The place to find them is Fletcher Jones Motorcars, Mercedes-Benz, in Newport Beach. The nice people who buy there trade in their hopelessly obsolete 2009 S-Classes for 2010 S-Classes every year. Must be great to have customers like that. Anyway, I knew I would find a nearly new SL class there, and I did.

      It was a 2009 SL65 AMG with under 10k miles for $150,000. List price is about $200k. In other words, his depreciation was around 25% even though the car was being sold through a dealer with a dealer warranty. And this is a car whose rarity is comparable to the Tesla.

      So I can’t realistically see the Tesla as being worth more than about $75k, since they originally cost about $100k.

      I think the owners are kidding themselves by setting such high reserves.

      Even though I would still love one, personally. I wonder how much I would pay if I was in a position to own one. Judging by these eBay auctions, I think the price difference between new and used is too low to get me in a used – I would be better off buying new.

      Or just wait for a Model S …

      D

  • avatar
    tauronmaikar

    Tesla is a marketing company selling a lifestyle product to treehugging celebs with high cash-to-intelligence ratios. It is based on ordinary technology and outsourcing. There are no competitive advantages to Tesla. They also don’t possess a high degree of engineering prowess or a desirable brand. Betting on them is burning cash.

    • 0 avatar
      carguy

      +1: A Concise summary of the Tesla business model.

    • 0 avatar
      sastexan

      It’s not just treehuggers – I know someone in California who bought one, admittedly has a huge house therefore pays an exorbitant rate for electricity – he got over a 50% discount on the rate he pays for power with the car (IIRC $0.44/kwh vs. $0.20/kwh). Plus he put some solar panels up that paid for themselves within 14 months with all the tax incentives (fed, state, local, power company).

      He’s anti-handing money over to the Arabs mostly, but also smart businessman and figured out how much the “real” cost was cheaper than leasing another 645 or similar drop top.

      Plus it’s a helluva lot of fun and fascinating technology.

  • avatar
    Tstag

    I can’t see Tesla lasting long. The big boys like Renault and GM are working on Series hybrids and in electric only cars. Within a few years there will be a lot of players in a market which may open up quite slowly.

    Interestingly Jaguar Land Rover is now working with Lotus on a series hybrid of their own. But instead of mating a piston based engine to a battery they are going for a Jet engine instead! Imagine driving an F Type Jaguar with a Jet engine under the bonnet powering an electric motor…mmmmmm Tesla? Who are they?

  • avatar
    IGB

    Everyone in the banking industry has been spending the last 2 years cashing out. The Tesla IPO may simply be a way for the current Tesla investors/bag holders to cash out as well. The key will be wether they can sell during a Fed fueled updraft in the market or catch some sort of Fed Green Credit to pocket before they go down in flames (sparks?)

  • avatar

    Tesla has proven that its technically possible to build an electric performance car and that there are customers atop the nosebleed portion of the cost curve. At a $100k+ price point they are toast after they have tapped out the limited supply of rich greenies as tauronmaikar points out.

    As soon as they announced plans to place their factory for the White Star in CA I knew it was more a scheme to extract favors from the Federal and State Governments that a viable car business. CA makes the short list of worse places on earth to site a new plant.

    As best they will be a footnote in history as the Tucker of the 21st century.

    If the Nissan/Renault Leaf is a success I could see niche for performance coupe at $25-35k.

  • avatar
    TZ

    “Tesla plans to replace the Roadster, but not “until at least one year after the launch of the Model S, which is not expected to be in production until 2012.””

    does not even remotely equate to:

    “Tesla to…kill the Roadster.”

  • avatar
    red60r

    Interesting commentary in that photo — gas-burner atop hybrid atop electric. And so goes the real world for now.

    • 0 avatar
      geozinger

      I would have to agree with that assessment. However, TTAC should use that photo for a caption contest. Although I have to admit, I can’t think of anything snarky to write, right at the moment…

  • avatar
    fincar1

    I also found it interesting…what are the chances of a Tesla and a Prius being involved in the same accident? That looks like a Danish license plate on the Touareg; I wonder if the wreck happened in Denmark. I wonder in that case if Tesla buyers get a break from the confiscatory Danish taxes on new vehicles.

  • avatar

    The chance of seeing a Tesla in any particular accident is low, because there are so few of them on the roads. Yet, per vehicle, the chance of a Tesla being involved in an accident is probably on the high side, since people are going to be driving them hard and fast. As for the Prius, it’s as likely to be involved in an accident with a Tesla as any other vehicle of its popularity.

    Obviously the outsourcing business model has its potential glitches. They may replace the roadster with another, but it’s bound to be different, unless they put a lot of work into it.

  • avatar
    Greg Locock

    IIRC 8% profit margin is much better than any volume car seller was making 4 years back, although it does rather depend on how you calculate it.

    They can build ahead the cheap bits (the gliders) to cover the expected gap between 2011 and 2012 production, and then build and fit motors and batteries when the car is ordered.

    Stockpiling a year’s production is not JiT, but is often done.


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