Tags: Tesla Motors | TSLA | autos | electric cars | stocks

Tesla Motors Scrambles for Mid-Market Car

By    |   Wednesday, 29 Jun 2011 11:32 AM

Tesla Motors (TSLA) is driving to become one of the world's leading manufacturers of passenger vehicles powered by electricity. The Palo Alto, Calif. company makes a small volume of high-priced electric vehicles and sells such components as battery packs to other electric vehicle manufacturers. Tesla's Roadster model, with a range of 245 miles on a single electrical charge, sells for $101,500. The company had delivered 1,650 Roadsters by the end of March.

Tesla is preparing to start production of a lower-priced electric vehicle, the Model S, with an optional range of up to 300 miles on one charge. The effective price of the Model S with a standard 160-mile range would be $49,900 in the United States, assuming the continuance of a $7,500 federal tax credit for the purchase of a qualifying electric vehicle.

"Overall, we remain on track for the first customer deliveries of the Model S in mid-2012," said Elon Musk, chairman and chief executive officer of Tesla, in a statement included in the company's first-quarter earnings report. Musk, who owned 29 percent of Tesla at the end of 2010, made a fortune from the sale of electronic payment system PayPal, which he co-founded.

Tesla has incurred operating losses but also has attracted capital and credit. In July 2010, Tesla issued 11.8 million shares at $17 in its initial public offering of stock. Concurrent with the IPO, Tesla privately issued another 2.9 million shares to Toyota Motor Corp.

In January 2010, Tesla obtained a $465 million low-interest loan facility from the Federal Financing Bank and the U.S. Department of Energy. At the end of March, Tesla had $102.5 million of outstanding loans under the government loan facility, with interest rates ranging from 1.7 percent to 3.4 percent.

Tesla reported a net loss of $48.9 million in the first quarter. But its cash position remained stable, largely because the company took down $30.1 million under the government loan facility during the quarter. Tesla ended March with $100.6 million of cash, up from $99.5 million three months earlier.

Aiming for the center

In mid-June, most stock analysts following Tesla recommended buying the company's shares. Asif Suria warned, however, in his Suria Investment Newsletter that competition could slow Tesla: "With the introduction of the Nissan Leaf and the Chevy Volt, competition in the mid-segment of the electric car market may be fierce by the time Tesla rolls out its slightly more affordable cars.”

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Tesla Motors (TSLA) is driving to become one of the world's leading manufacturers of passenger vehicles powered by electricity. The Palo Alto, Calif. company makes a small volume of high-priced electric vehicles and sells such components as battery packs to other electric...
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2011-32-29
Wednesday, 29 Jun 2011 11:32 AM
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