February 1, 2010 / 8:33 PM / 8 years ago

BREAKINGVIEWS-Tesla IPO looks racier than its Roadster

-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --

By Antony Currie

NEW YORK, Feb 1 (Reuters Breakingviews) - Tesla Motors looks set to take potential shareholders on a hair-raising ride.

The Silicon Valley-based electric sportscar maker has just registered with the Securities and Exchange Commission for an initial public offering. After a year of much improved sales and good publicity while Detroit suffered, Tesla has certainly timed its move well. But the firm’s finances may be too volatile for many investors.

It doesn’t help that Tesla is losing money, especially as it was hoping to break even last summer -- though the company did almost cut its losses in half in the first nine months of 2009 to $31.5 million. But a bigger problem is that it looks as if Tesla will soon be facing a year or more when it will not sell a single vehicle.

That’s because an undisclosed supplier will be retooling its factory next year. When that happens, Tesla has decided it will stop manufacturing the current version of the Ferrari-fast Roadster -- its only vehicle, which is partly assembled by Lotus.

It doesn’t expect to start producing the next generation of its signature model until 2013 at the earliest. The company’s new vehicle, the Model S sedan, is expected sooner but still won’t go on sale until 2012.

And that’s assuming there are no delays. But the company’s SEC filing reveals that Tesla boss Elon Musk and his colleagues have not yet finalized the design of the Model S. Nor have they lined up a manufacturing facility or devised a production process. And any setbacks on the Model S will push back development of the new Roadster.

What’s more, the company is under the gun. Along with its $100 million in cash and its $465 million loan from the U.S. Department of Energy, executives reckon the proceeds from the IPO will give it the wherewithal to stay afloat for two years.

Tesla has a habit of confounding skeptics. Its green credentials will make it a trophy buy for some. And the first IPO of a U.S. automaker since Ford in 1956 is quite the landmark. But with the young company facing at least one of the next two years burning through cash, Tesla’s IPO has a touch of the dotcom about it. Perhaps that’s fitting. But at least for now, the futuristic carmaker’s shares may prove too racy for many to stomach.

CONTEXT NEWS

-- Silicon Valley-based automaker Tesla Motors on Jan. 29 registered with the Securities and Exchange Commission for an initial public offering. Among the risk factors the firm outlines is a lack of revenue starting next year when it will cease selling the current Tesla Roadster model because one of its suppliers will be retooling its plant.

-- Tesla is planning on introducing its Model S sedan in 2012, and hopes to launch the next generation of the Roadster a year after the Model S goes on sale.

-- SEC filing: r.reuters.com/sut96h

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-- For previous columns by the author, Reuters customers can click on [CURRIE/]

Editing by Richard Beales and Martin Langfield

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