Tesla's Roadster gets a re-charge, and so does the company's bank account
Tesla Motors said late Friday that is would launch a $100 million initial offering of stock, capitalizing on what is likely to be tremendous enthusiasm for its long expected IPO.
The high-end electric automaker, which has sold 937 Roadsters as of December in 18 countries, said it would use the money to expand its operations as it plans a second model, the Model S.
In a filing with the Securities and Exchange Commission, the company disclosed that through September 2009 it had generated $108.2 million in revenue and accumulated debt of $236.4 million. Its net loss for 2009 was $31.5 million, a reduction from 2008.
The company’s stock sale is the first by one of a new generation electric car company that hopes to capitalize on the nation’s growing awareness of global warming. Electric cars promise to help reduce greenhouse gases, but they require a shift in driving habits that consumers have yet to embrace. Most significantly, electric cars are constrained by the capacity of their batteries.
Tesla is better suited than many in this regard. The batteries in its sporty Roadster can cover 236 miles on a charge, when new. But consumers must be willing to pay for this advantage. The Roadster starts at $101,000.
The company’s IPO will be managed by an all-star line up of white shoe Wall Street firms: Goldman Sachs, JP Morgan, Morgan Stanley and Deutsche Bank Securities. It ability to attach such big names suggested expectations are high.
In its filing, the Palo Alto manufacturer indicated that its present financial status is healthy. It has cash of $106 million and 514 employees. In addition, it secured a $465 million loan with loan guarantees from the federal government earlier this month. The money will go toward building a production center for the Model S sedan, which will launch for $49,900 in 2012. The IPO money also will be use the money for capital expenditures, the company said.
Nevertheless, uncertainties accompany the offering. There is no guarantee that Americans and drivers elsewhere will flock to electric vehicles, especially ones priced as high as Tesla’s. The company acknowledged this in its filing by saying that as of Dec. 31, orders for Roadsters stood at 220 and for the Sedan S, 2,000. It is not a large security blanket for a company seeking $100 million.
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