Tesla To Go Public; Kill The Roadster
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.”There’s more bad-to-iffy news in the IPO filing: Tesla’s current profitability isn’t as real and solid as they have made it out to be. Wired explains it this way:
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?
David C. Holzman on Jan 31, 2010
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.
Greg Locock on Feb 01, 2010
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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