If Tesla Roadster Production Ends in 2012, Show Us The Money Page 2

By John Voelcker

John Voelcker

Senior Editor BIO

John is Senior Editor for High Gear Media. In addition to news coverage and new car reviews, John creates and oversees all editorial for High Gear's... More

LATEST ARTICLE
2013 Nissan Altima: 31-MPG Combined Rating For Mid-Size Sedan
Today's the day when we can talk about the all-new 2013 Nissan Altima, the latest generation of... Read More

• #4LEADERBOARD RANK
• 2324ARTICLES CONTRIBUTED
• 1030COMMENTS POSTED

4,798 views Feb 1, 2010

Follow John

Add to circle

Tesla Model S Sedan

tesla london store 001

Enlarge Photo

"Briefly profitable"

Tesla is seeking to sell $100 million of common stock in its IPO, underwritten by Goldman Sachs, Morgan Stanley, JP Morgan, and Deutsche Bank Securities. No date or pricing has been set for the offering.

Previous investors in Tesla include Sergey Brin and Larry Page, the founders of Google, along with five venture capital funds, including Draper Fisher Jurvetson. Last May, Mercedes-Benz parent the Daimler bought a 9-percent stake in Tesla, which valued Tesla at $550 million.

In the nine months ending September 30, Tesla's filing indicates it lost $31.5 million on revenue of $93.4 million. That was less than its loss of $57.3 million in the same nine months of 2008.

CEO Elon Musk has  told reporters the company was "briefly profitable" in mid-2009, which it had to be to qualify for the DoE loans. He termed the Model S expenses "quite significant and growing with each passing month.”

Is there enough cash?

In the grand scheme of things, the $100 million Tesla seeks from its IPO is not much for a car company. To fund the global renovation of its lineup and operations, for instance, Ford [NYSE:F] CEO Alan Mulally pledged all of Ford's asset to secure a $23.4 billion line of credit in 2006.

Tesla is hardly comparable to Ford, of course. But developing a single new vehicle for global sale routinely costs carmakers up to $1 billion for design, engineering, prototypes, durability testing, crash tests, and setting up supply chains.

2011 Coda Sedan prototype - side

Enlarge Photo

2011 Coda Sedan prototype - front

Enlarge Photo

2011 Coda Sedan prototype - rear

Enlarge Photo

Tesla's Mobile Service Ranger vehicle

Enlarge Photo

Adapting one Chinese sedan: $100 million

Even cutting development costs by reusing an existing platform and outsourcing assembly--both of which Tesla did with its Roadster, adapting Lotus Elise components and hiring Lotus to build it--is hardly cheap.

Take startup Coda Automotive, for example, which plans to launch its $45,000 all-electric 2011 Coda Sedan late this year in California. To do so, Coda has re-engineered an existing compact sedan from China for electric drive, and to meet U.S. regulations and expectations.

Coda CEO Kevin Czinger told us that Coda will have spent more than $100 million by the time it brings its 2011 Sedan to market. Yet that's the total Tesla hopes to raise from its IPO.

$465 million from DoE

Tesla has now closed on $465 million of low-interest loans from the U.S. Department of Energy, announced last June along with larger sums to Ford and Nissan.

The money loaned to Tesla will finance design, engineering, and assembly of the Model S, along with renovation of a California plant to assemble lithium-ion battery packs for its cars and for sale to other carmakers.

Tesla has said the Model S will be a brand-new vehicle, on a purpose-built platform, to be assembled in a California plant that it has not yet finalized. Most observers are skeptical, assuming that the Model S will be built around components or a complete vehicle from investor Mercedes-Benz.

Can it keep the doors open?

But if Tesla has no income during 2012, while it rushes to get the Model S to market, the company will likely spend something like $150 million to keep the doors open and the lights on.

Assuming further losses during 2010 and 2011, whether it will have that much cash left to spend seems very much open to question.

And industry analysts are skeptical that the DoE's $465 million will be enough to design, engineer, test, and launch a brand-new electric car--especially one to meet the demanding requirements of luxury sports-sedan buyers--plus renovate a factory to build it in.

Tesla stays mum

Tesla has declined to comment on these issues to any media outlets, including GreenCarReports.com, citing the quiet period that will last until its IPO.

Any readers out there want to help us do a little forensic analysis of Tesla's financials? Drop us a note!

[Wired via Jalopnik; Tesla Motors Form S-1 via The New York Times; Automotive News (subscription required)]