Filed under: Coupes, Hybrids/Alternative, Sports/GTs, Etc., Earnings/Financials
How Tesla is financing its future
Tesla has big plans, and to finance them it plans to raise big money. How? First, with an influx of venture capital that could put 10-percent of the company in VC hands. There has also been talk of an IPO, which Chairman Elon Musk thinks could raise $100 million dollars, and Musk said he plans to take the company public by the end of this year. And to make sure Tesla's coffers are topped up, the company plans to partake in a loan guarantee program offered by the U.S. Department of Energy for up to $200 million.
With a potential $300 million in the bank, not including the initial public offering, Tesla could get serious work done on the Whitestar sedan. Tesla hopes to have the sedan in production by 2010. If you're liking the sound of all this and want to know how you can get some Tesla stock, we recommend buying a Tesla. Musk wants to reward believers, and is trying to figure out how the company can offer customers the chance to legally buy in before the IPO.
[Source: AutoblogGreen]
Reader Comments (Page 1 of 1)
Pips 6:06PM (5/20/2008)
i can smell scam all over these tesla..........stay away guys!
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Jo. A. Borras 6:39PM (5/20/2008)
Sounds an awful lot like Vector.
Rob 7:16PM (5/20/2008)
For a car company that just opened a new sales office, and 2 months ago began regular production, they haven't sold many cars. Dunno if that's scamola, but it's certainly odd. It's only prudent... buyer beware.
Pips 6:07PM (5/20/2008)
enron anyone?
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Phil L. 6:13PM (5/20/2008)
I must admit I'd feel a whole lot better hearing about Tesla's high finances if a few thousand - or even a few hundred - Roadsters were in the hands of happy customers.
With virtually no production complete and the needs for version numbers to track transmission designs, talk of several hundred million dollars of finance for future development seems awfully premature.
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Xcountryflyer 12:23AM (5/21/2008)
Saw an Electric Blue one right beside me this evening in the San Jose area. At first I thought it was Lotus when I was a distance back and then saw the Tesla lettering on the back.
From an article on the Web, I guess that Electric Blue one was one of about five cars in existence. It had MFG plates.
Frank 6:52PM (5/20/2008)
Depending on management, competetive advantage, and the risk/reward theory w/ full disclosure of the 3 it could be a good investment. You'd be wise to look at the prospectus before knocking it.
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Will 6:53PM (5/20/2008)
I can't find the figure, but didn't Tesla only have 160 million to work with up till this point? I thought the consensus was that they were working miracles on the budget, which really is not much to start an entirely new car company. I guess any amount is too much if the cars never show up. Hmmm, as I write this, I must admit, the whole scenario does sound a bit sketchy.
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Jared 7:10PM (5/20/2008)
When large auto companies talk about the cost for a new model, they are typically quoted as saying it cost in billions of dollars. For example: http://www.autoblog.com/2007/04/18/next-gen-astra-world-car-to-cost-gm-4-2-billion/
So how is Tesla going to cut that cost by an order of magnitude? After all, the have yet to be able to complete the development of the Roadster, and that is heavily based on an existing Lotus.
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DesiAuto 7:38PM (5/20/2008)
Not everything that comes from large auto companies is truth.
What if it actually doesn't cost billions?
zamafir 8:20PM (5/20/2008)
How? It's pretty obvious, they didn't create a new car from scratch, they simply made the elise electric.
DesiAuto 7:36PM (5/20/2008)
I really wish this guy and Tesla become successful. Unfortunatly it's gonna make Detroit 3 look like losers.
I do not doubt these guys intentions. (after all he appeared in TiE - http://www.tie.org interview :-)
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cly 7:40PM (5/20/2008)
DeLorean
part deux
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Toy Yoda 7:51PM (5/20/2008)
I guess Tesla needs to finance things in order to survive.
I hope Tesla makes it, but I can't see how. If any of the big car companies want to make an electric production car, they can. Then how will Tesla compete? Perhaps they are hoping to be absorbed into bigger car company.
The fact that Tesla hasn't really delivered a car yet, and a re in a business where the profit margins are like 5% even for Toyota, makes them sound like the dot.com bust of the green revolution. Hopefully not, however.
Good Luck to Tesla!
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simianspeedster 12:08AM (5/21/2008)
"The fact that Tesla hasn't really delivered a car yet, and a re in a business where the profit margins are like 5% even for Toyota, makes them sound like the dot.com bust of the green revolution."
EXACTLY! I was just going to write the same thing.
Whether or not you believe in what Tesla is doing from an engineering or environmnetal standpoint, one has to wonder if this company is going to be viable for long. They've already had a serious company-wide shake up and it's clear that there are is a lot of ego clashing at play. The whole thing reaks of dot com.
Tesla isn't satisified with offering an innovative product -- they've decided they have to re-invent the automotive landscape starting with their giving the finger to established sales and distribution models or the possibility of partnering with an established presence. Not good when calpital is scarce. Sell some product first, then change the world.
The Tesla Roadster is an interesting engineering exercise and I'm sure it will satisfy plenty of celebrity owners purchasing their 4th or 5th car, but you have to wonder how big the market is for a $50,000-60,000 White Star sedan which will likely lack the engineering and testing that one can find in a $20,000 Civic today.
Tread carefully, investors.
-SimianSpeedster
why not the LS2LS7? 11:01PM (5/20/2008)
"Musk wants to reward believers"
You mean like Martin Eberhard, who Musk has been dicking over for at least 3 months?
"and is trying to figure out how the company can offer customers the chance to legally buy in before the IPO."
I don't know why I have to explain finance to a guy who has made $500M in IPOs before, but before you go public, it is a private company. The equity holders can legally do whatever the hell they want with it. They are beholden to no one. You can give the company away if you'd like. All you have to do is get the equity holders (generally the board holds over 50% of the stock at a private company) to amend the corporate bylaws to do it. The only stick part is if you do weird stuff to your finances, can you then find an underwriter to underwrite your IPO. Well, since all the investment banks' names are mud right now, they have little to lose by attaching their names to an IPO, so yeah, I think they'd find an underwriter.
As to them going IPO this year, they haven't made anything. They haven't sold a single car to a customer. And they haven't realized a single nickle of revenue or showed a path to profitability, let alone generate an operating profit. They'll be $200M behind the 8-ball in loans (even though guaranteed, that only bails out the loan holder, it doesn't absolve the company taking out the loan). If they can go public in their current state, the public is bigger suckers than even P.T. Barnum thought.
Remember this about an IPO. At an IPO, the current owners of the company are selling their ownership in the company to the public. The current owners are the ones who know the most about the state of the company. If they are selling their ownership, why would you want to buy it? If this company was such a damn good investment, they'd be holding on to it.
Sadly, I was just reviewing what Martin said to me a while back on ABG. He said "Look at our investors, do you think Elon Musk is in this just to turn a quick buck?" With another year of info under my belt, I feel more comfortable saying yes now than I did back then.
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tankd0g 11:46PM (5/20/2008)
I can't believe I get to use this joke for the third time on autoblog but:
Conspicuously absent from Tesla's new business plan: selling cars.
Dot com with 4 wheels. Make checks payable to cash please.
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Malfoy Roark 12:13AM (5/21/2008)
Jay Leno has one and loves it. He did one of his internet shows about it. The car is the real deal. Just an issue of making a bunch of them.
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why not the LS2LS7? 3:15AM (5/21/2008)
Jay Leno's was borrowed, he doesn't have one yet.
#1 went to Elon Musk. #3 and #4 are done and went to customers, #2 isn't done yet.
http://www.autobloggreen.com/2008/05/15/tesla-sends-out-a-new-production-update-to-customers/
And when I say "production model", I'm playing a bit lose, as Tesla is. The "production models" so far made have been with an interim drivetrain that will be replaced later at no charge.
So I guess I have to retract a bit of what I said above. They seem to have delivered two cars to customers now.
BlackbirdHighway 8:45AM (5/21/2008)
You guys are sooooo predictable. All I had to do was read the title, and I could predict the comments:
"It's a scam"
"It's a DeLorean"
"They haven't delivered any cars and never will"
Very, very predictable.
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