Tesla as a long-term car company
I think the electric car will come to market. I think it will come to the market in all shapes and forms with all types of hybridization. The question is whether Tesla can create a company that will perform and function the way other car companies are expected to perform and function on a long-term basis.
There are people buying Tesla’s IPO.. There are people already selling that stock. Whether a company goes public, or not, is not the deciding factor of whether the company is an on-going concern.
* Tesla has no car dealerships, no manufacturing plant of its own.
* Tesla has never earned a profit and has lost almost $300 million since starting a business.
* Tesla received $50 million from Toyota, and another $495 from the Department of Energy to put towards the “S” ramp up.
* Part of the agreement was that Tesla had to have an IPO before December 31 to meet Toyota’s requirements.
And yet, Tesla has just taken their company public and made a quick cool $225 million.
Will Tesla survive? I think Tesla’s cars will survive, if they are bought by a larger group, such as Daimler or Toyota.
Here are some of the findings from the SEC filing that make me say this:
Daimler & the Smart ForTwo
(from SEC filing) In the Securities and Exchange Commission filed today by Tesla they note that Tesla has developed a relationship with Daimler AG, or Daimler, since March 2008 to apply our technology in a battery pack and charger for Daimler’s Smart ForTwo electric vehicle. Tesla was selected by Daimler to supply it with up to 1,000 battery packs and chargers to support a trial of the Smart ForTwo electric vehicle in five European cities. Tesla began shipping the first of these battery packs and chargers in November 2009 and started to recognize revenue for these sales in the quarter ended December 31, 2009.
(from SEC filing) Blackstar Investco LLC, or Blackstar, an affiliate of Daimler, holds more than 5% of our outstanding capital stock. Other than our arrangement with Daimler, we have not entered into a development or sales agreement for our electric powertrain business. There are no assurances that we will be able to secure future business with Daimler.
(from SEC filing) We anticipate that we will experience a decrease in revenues and an increase in losses prior to the launch of the Model S. Prior to the launch of our Model S, we anticipate our automotive sales may decline, potentially significantly as we do not plan to sell our current generation Tesla Roadster after 2011 due to planned tooling changes at a supplier for the Tesla Roadster, and we do not currently plan to begin selling our next-generation Tesla Roadster until at least one year after the launch of the Model S, which is not expected to be in production until 2012.
Furthermore, except for our arrangements with Daimler, we do not currently have any significant arrangements in place with third parties for the development or purchase of components in our electric powertrain business. There are no assurances that we will be able to secure future business with Daimler as it has indicated it’s intent to produce all of it’s lithium-ion batteries by 2012 as part of a joint venture with Evonik Industries AG.
Toyota bought $50 million worth of stock in a private placement, giving the Japanese automaker a 3.6% stake in Tesla.
Daimler spent $50 million in May 2009
Department of Energy
(from SEC filing) We have entered into a $465.0 million long-term loan under the United States Department of Energy’s Advanced Technology Vehicles Manufacturing Incentive Program which will be used to finance the development of a planned integrated manufacturing facility for the Model S as well as our electric powertrain production facility.
California Alternative Energy and Advanced Transportation Financing Authority
(from SEC filing) We also have been granted up to approximately $31 million in tax incentives by the California Alternative Energy and Advanced Transportation Financing Authority. We believe these loans and incentives will help accelerate the time to volume production for both the planned Model S and our electric powertrain business. In addition, we believe these loans and incentives provide us significant long-term financing that should enable us to focus more of our resources on the execution of our business plans.
There are car companies that have dealerships, places to service the electric cars they will be bringing out. Tesla is talking about making 20,000 Model S electric vehicles and the Roadster and trying to make this car company viable. According to a report Nissan has already requested 20,000 of its Leaf EVs, at a base price of $32,780.
It’s not hard to see the discrepancy when you know that Nissan reported revenue of $81.1 billion in its fiscal year ended March 31. Tesla had revenue of $112 million in its fiscal year 2009.
Listen as Larry Kudlow, CNBC, Hammond, and Batchelor talk about Tesla on the nationally syndicated John Batchelor show in the podcast below.