As Tesla Motors begins selling stock to the public on Tuesday, the offering’s success depends on how much investors are willing to bet on a car company that has never made a profit and expects to lose money until 2012.
Tesla will be the first automaker go public since the Ford Motor Company held its initial public offering in 1956. It expects the stock sale to raise up to $185 million.
The start-up company, which is based in Palo Alto, California, believes Americans’ taste in cars is changing. Most analysts agree that electric cars like Tesla’s will catch on as gas prices rise and environmental worries mount.
But Tesla faces bigger questions. It has lost $290.2 million since it was founded in 2003 and has not had a profitable quarter.
It does not expect that to change until it starts selling its next vehicle, a four-door electric sedan called the Model S, in large numbers. That is not scheduled “until 2012, or possibly later,” according to its filing with the Securities and Exchange Commission.
The only car that Tesla now offers is its two-door Roadster — priced at more than $100,000. Tesla has sold just 1,000 since 2008.
“They’re going to have to have a dazzling road show explaining their numbers, which are not good,” said Scott Sweet, owner of I.P.O. Boutique, a research firm.
Tesla’s goal is to build 20,000 Model S sedans a year, which are expected to cost about $50,000 after federal tax credits.
Whether Americans will take to electric cars is another question. One of the biggest obstacles to the wider adoption of electric vehicles has been their limited range compared with gas-fueled rivals.
“There are very few places you can plug in your electric vehicle where you park during your day,” said Angus MacKenzie, editor in chief of Motor Trend magazine.
Even if Americans embrace electric cars, by the time the Model S arrives, it will have stiff competition.
The Nissan Motor Company is already taking orders on its electric car, the Leaf, which gets 100 miles a charge and is priced at about $25,000 after tax credits. The Chevrolet Volt, an electric car with a gasoline range-extender, goes on sale by the end of this year with a $35,000 price tag. — AP