Tesla IPO in the Works?

Edward Niedermeyer
by Edward Niedermeyer

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.

Edward Niedermeyer
Edward Niedermeyer

More by Edward Niedermeyer

Join the conversation
2 of 5 comments
  • Porschespeed Porschespeed on Nov 22, 2009

    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.

  • Detlump Detlump on Nov 22, 2009

    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?

  • Alan Like all testing and analysis work you need a good set of requirements. If you don't you'll find or end up with gaps.
  • Alan In aviation there is more vigourous testing, well, until Boeing changed things.
  • Alan This outcome was certain.The US, Australia and Canada need to approach this differently. A policy towards plug in hybrids should of been a first step. As in CAFE gradually tighten FE from there.There's no reason why you can't have a 2 litre F-150 with electric motors putting out 400-500hp. A 2 litre turbo is good for 200hp more than enough to move a pickup.Also increase fuel tax/excise every year to fill the void in loss of revenue.
  • Doug brockman hardly. Their goals remain to punish us by mandating unsafe unreliable unaffordable battery powered cars
  • Lorenzo It looks like the curves are out and the boxy look is back. There's an upright windscreen, a decided lack of view obstructing swoop in the rear side panels, and you can even see out of the back window. Is Lexus borrowing from the G-Class Mercedes, or the Range Rover?