Green Update–>Tesla’s IPO Hits Big

June 29th, 2010
Tesla Store, Los Angeles

Tesla Store, Los Angeles

We’re happy to report that the Tesla IPO has been a success. They have sold 13.3 million shares at $17, raising $226 million, 27 percent more than anticipated. The first IPO by an American auto company since Ford’s in 1956 has seized the imagination of at least some investors.

Virtually all the stories reporting on this have stressed the fact that the company has never made a profit, expects big losses going forward, and makes a very pricey vehicle that few Americans have shown much interest in buying.

Those who have read our coverage of Tesla probably know that these arguments would never dissuade someone who sees the long-term growth possibilities in the company (and the electric car industry). One writer has gotten the message: see “5 Reasons Why Tesla Stock is Worth It.”

The skeptics continue to write that Tesla’s offering will be too expensive and too late. They compare the Model S to the Volt and the Leaf—cheaper cars, yes, but selling in very different market niches. We called these people “electric naysayers,” because they consistently see the problems outweighing the opportunities.

Elon MuskThe driver of Tesla’s IPO success is surely CEO Elon Musk, who has thrown some $70 million of his own money into the company. He talks to Bloomberg here (if you can stand interviewer Betty Liu) about the IPO and future plans. Musk has been successful at attracting investor money into his other ventures as well. Not least of his supporters is the U.S. Department of Energy, which has provided Tesla with a $465 million loan.

The company’s goal, he says with only a little fudging, is to remain independent and expand many times over (“3,000 percent in two to three years,” says Musk). Thus, losses will continue in order basically to create the market for a luxury, longer-range electric sedan—and then less expensive models after 2012.

It will be interesting, to say the least, to compare Musk’s ideas to GM’s planned public offering, which may be outlined in a press conference today. In a funny way, I think Musk’s track record so far is better than Ed Whitacre’s. GM’s CEO is the one credited with the ridiculous mission statement: “Design, build and sell the world’s best vehicles.” If you believe GM can do that, I’ve got a used Tesla Roadster I’d like to sell you.

What do you think of Tesla’s long-term expansion plans? Are they feasible?

—jgoods

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