Tesla Refines its Breakthrough Electric Roadster

USA Today

 

For a company that hasn't sold that many cars, you wouldn't expect Tesla would be ready for an upgrade. But now comes what it says is its fourth-generation roadster, the 2.5. The timing couldn't be better, coming the same week as Tesla's initial stock offering.

The model features some cosmetic changes, interior improvements and a larger touch-screen. The front clip and rear diffuser have been refreshed, supposedly to resemble stylistic cues on the upcoming Model S. Other exterior changes include new forged wheel designs.

Under the hood, the 2.5 Roadster gets improved sound-deadening materials and something called "power control hardware" that allows the driver to maintain a vigorous driving style even under severely hot temperatures. And inside?:

Inside, the Roadster gets improved seats that include larger bolsters and a new lumbar system for better comfort. The optional navigation system has been upgraded to a 7-inch screen with a backup camera; last year's was a tiny in-dash unit.

The 2.5 Roadster will be available at Tesla stores shortly. If you're already one of the 1,000-plus owners of a Roadster, you can get many of the new features on your vehicle if you are willing to upgrade, according to Tesla.

Tesla Motors Sets IPO for Week of June 28

The Wall Street Journal

 

The Palo Alto, Calif., company, which makes a luxury all-electric car that sells for $109,000, plans to sell 11.1 million shares between $14 and $16 a share. It has applied to list on the Nasdaq under the symbol TSLA.

Although Tesla has never been profitable and had sold only 1,063 of its Roadster models as of March 31, the company's offering has drawn the attention of green energy investors and high-end car buffs alike. The vehicles can accelerate to 60 miles an hour in about four seconds and are based on a model made by Lotus, the British luxury sports car maker.

The company is working on launching a $50,000 sedan by 2012. That sedan will be the first Tesla to be produced in larger volume for more of a mass audience, and its design will be a template for further mass-produced Tesla models.

Tesla, whose chairman and chief executive is Paypal founder Elon Musk, is going public just as it expects to sell fewer cars. It won't be selling its current Roadster model after 2011, leaving a gap before it rolls out the sedan, known as a Model S.

Following the IPO, Musk will own at least 28.8% of the public shares of the company, according to a regulatory filing.

Immediately following the IPO, Tesla is selling $50 million of its shares at the offering price to Toyota Motor Corp. (7203.TO, TM) as part of an agreement reached last month with the world's largest automaker. At a $15 offering price, Toyota would have 3.33 million shares and less than 3% ownership of the company. Daimler AG (DAI.XE), through its affiliate Blackstar Investco LLC, had a stake of 9.6% prior to the offering, but the stake will likely be 7% or less afterwards, a person familiar with the matter said.

While electric automobiles are seen as an emerging technology, they are considered an early-stage industry that could take a decade or more to become more established. That could make the offering tricky, given the difficulties facing the IPO market.

Tesla plans to spend $42 million to purchase the former New United Motor Manufacturing Inc. plant in Fremont, Calif., a few months after the IPO. The plant is owned by Toyota and Motors Liquidation Co., which is the remains of the former General Motors Corp. that is in bankruptcy.

As a condition of Tesla's $465 million loan facility from the U.S. Department of Energy, 50% of the proceeds from the IPO must be set aside in an account to pay for capital expenses related to building the Model S, which would include purchasing the plant. The DOE loan can be used to reimburse Tesla for the costs.

Investors have forced several companies to reduce their terms in order to get deals done, and the pace of postponements and cancellations has been rising. In a positive sign, this week's high-profile offering, the $339 million IPO for CBOE Holdings Inc. (CBOE), priced at the top of its range and rose in early trade on its Tuesday debut.

In its prospectus, released Tuesday, Tesla said it had a loss of $25.5 million in the first quarter of 2010, compared with as loss of $16.0 million a year earlier. For all of 2009, the company's loss narrowed to $55.7 million from $82.8 million a year earlier.

Automobile sales, including zero-emission vehicle credit sales, totaled $20.6 million in the first quarter, down slightly from $20.9 million a year earlier. Sales for all of 2009 totaled $111.9 million, up sharply from $14.7 million in 2008.

Toyota Buying Tesla Stake for Electric Car Tie-Up

Bloomberg / Business Week

 

Toyota Motor Corp., the world’s largest automaker, is buying a $50 million stake in the Californian electric-car maker Tesla Motors Inc. as automakers compete to offer low-polluting models in the U.S.

Tesla will also buy a closed Toyota joint-venture factory in California to build its Model S and other vehicles, Tesla Chief Executive Officer Elon Musk said yesterday. The companies said they’ll cooperate in developing electric cars, parts, production systems and engineering support.

The deal may help Toyota, the world’s biggest carmaker, compete with Nissan Motor Co. and General Motors Co. in selling electric cars in the U.S., where regulations on greenhouse gas emissions and fuel efficiency are pushing them to offer advanced vehicles. It may also help the Toyota City, Japan-based company’s image, battered by recalls, by reviving the New United Motor Manufacturing Inc. plant in Fremont, California, known as NUMMI.

“This seems like a good deal for both parties, especially Toyota, from being able to avoid the political fallout from shutting NUMMI down to being able to offer a new electric vehicle with just a low initial investment cost,” said Jeremy Anwyl, Chief Executive Officer at auto industry researcher Edmunds.com in Santa Monica, California.

Joining Daimler

The size of Toyota’s stake in Tesla hasn’t been fixed ahead of a share sale by Tesla, Musk said in an interview. Daimler AG in May 2009 invested about $50 million in Tesla, which is supplying battery packs to the Stuttgart, Germany-based company for a test fleet of electric Smart minicars.

In July, Daimler sold a portion of its share of Tesla to the German automaker’s largest investor, Aabar Investments PJSC, reducing its stake to about 5 percent.

Daimler “welcomed” Tesla’s partnership with Toyota, which “likewise has the goal of advancing electric vehicles,” said Brigitte Bertram, a Daimler spokeswoman for the automaker in Stuttgart, Germany. The Toyota-Tesla linkup “doesn’t impede” Daimler’s cooperation with the California automaker.

Toyota fell 1.9 percent to 3,355 yen in Tokyo, while Nissan dropped 3.4 percent and Honda Motor Co., Japan’s second-largest carmaker, declined 2.5 percent.

The tie-up brings Toyota, the world’s biggest seller of hybrid autos, together with Tesla, the only company now selling U.S. highway-legal battery-powered cars. Electric-car technology has been supported by U.S. policy makers including President Barack Obama as a way to reduce the nation’s oil use and dependence on foreign energy sources.

Obama set a goal of getting 1 million plug-in hybrids and electric cars on U.S. roads by 2015.

Nissan, GM

Nissan is preparing to introduce its Leaf electric hatchback, powered by a lithium-ion battery pack, in Japan and the U.S. this year. Nissan Chief Executive Officer Carlos Ghosn has set a goal of leading sales of rechargeable vehicles, which he estimates may make up 10 percent of global auto demand by 2020, and is spending more than 500 billion yen ($5.5 billion) developing electric cars.

GM plans to introduce its Volt plug-in car in October. The car will initially be marketed to drivers in California, which requires large automakers to offer some vehicles that emit little or no tailpipe pollution.

Toyota intends to offer a short-range, “urban commuter” electric car in the U.S. in 2012 and begin retail sales of a plug-in Prius hybrid the same year.

Toyota, which will continue to develop its own electric vehicle, said Tesla’s long-distance models give the Japanese automaker more options. Toyota said hybrids should remain a more practical option for most customers until electric cars become more popular.

Share Sale

Palo Alto, California-based Tesla has 2,000 reservations for the Model S sedan and intends to begin “volume” production of the car in 2012, with a projected annual output of as much as 20,000 a year. The company has delivered about 1,000 of its $109,000 Roadster electric sports cars, while losing more than $230 million.

Tesla hasn’t posted a profit in the six years since it was founded. The company plans to use proceeds from an initial share sale and a $465 million government loan to help produce the Model S, an electric car that is to cost less than $50,000 after a federal tax credit.

Fund Raising

Tesla aims to raise about $100 million from its share sale and has said it may use proceeds to pay for factories and equipment estimated to cost as much as $125 million this year, and for acquisitions.

“I’ve felt an infinite possibility about Tesla’s technology,” said Akio Toyoda, chief executive officer of Toyota, founded by his grandfather. “By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business’ spirit.”

The company is backed by investors including Mountain View, California-based Google Inc.’s co-founders Larry Page and Sergey Brin, and the government of Abu Dhabi. Daimler, the world’s second-biggest maker of luxury vehicles, invested last May. Tesla said Musk told Daimler about the Toyota partnership on May 19.

The revival of NUMMI, for 25 years a joint venture between Toyota and the former General Motors Co., will create 1,000 jobs, California Governor Arnold Schwarzenegger said. The plant closed in April.

Tesla Goes Public. Mind the Risk.

Business Week

Tesla Motors CEO Elon Musk is finally preparing to take his car company public. On Jan. 29, Musk’s company filed for an initial public stock offering, which he has talked about as a possibility for a couple of years. He wants to sell $100 million worth of stock, which could help fund a new factory or some acquisitions as Tesla prepares to launch its Model S sedan in 2012. The company originally planned to launch the car in 2011. Tesla sells a $109,000 Roadster now.

A couple of things come to mind. First is the company’s profit history—or lack of profit history—and the risk it presents for stockholders. The company has lost $236.4 million on $108.2 million in revenue since its inception in 2004, according to its prospectus. The company also disclosed that it has not made money in any one single quarter. As an aside, the company bragged that it made a $1 million profit in July of 2009, but obviously couldn’t sustain it. Any investor needs to know that it will be difficult for an electric-car company to turn a buck, especially given the cost of developing lithium ion batteries and the power electronics needed to make these cars go.

The second issue is Tesla’s future sales prospects. Tesla is first to market with an electric car that uses lithium ion batteries. BMW’s Mini E came second and is only leased in small batches. The green crown eagerly anticipates the Model S. If Tesla gets the car to market, it would be much more usable that the two-seat electric Roadster. But green cars are still a very tough sell. After a decade of selling hybrids, they account for around 3% of the market in any given month. Toyota’s Prius is the only one that sells in volumes above 100,000 a year.

By the time Tesla is selling Model S, Nissan will have its Leaf on the market, boasting 100 miles of all-electric driving. General Motors will be selling the Chevy Volt. There will be a plug-in version of the Prius and a few other entries on the way all with green cred to sell. These cars will come from established carmakers with big dealer networks to offer customers many convenient locations for sales and repairs. Those companies also have long histories to prove that they will still be around to honor warranties. That’s a tougher sell coming from a startup that hasn’t made money. Tesla is backed by $465 million in government loans, which will keep it going while it develops its battery packs and the sedan. Another $100 million will just add to its liquidity.

The challenge will be selling enough cars to stand on its own in the long run. Tesla wants to sell 20,000 of the Model S a year at $49,900 apiece, it said in its public filing. It’s hard to see that happening. It took Toyota three years to get to that kind of annual sales clip with the Prius, and it sold for less than half the price.

Tesla was the first company since GM launched the EV1 to sell an electric car. That was an impressive feat. It will be even more impressive if they can make a buck doing it.

Tesla Motors IPO Talk Heating Up

Venture Beat

Rumors are swirling today that Tesla Motors is seriously considering an initial public offering sometime soon. The talk has been tracked to two anonymous sources, who say the six-year-old company could cash in big on the battery-powered car trend before electric and hybrid models from companies like General Motors, Mitsubishi and Nissan make it to market.

Tesla has officially denied the prediction, calling the IPO chatter “rumor and speculation.” That said, going public in 2010 would give the San Carlos, Calif. company several distinct advantages. First, it would solidify its position as the electric car player to watch. It’s already been casually anointed as the leader by industry observers and the Department of Energy, which granted it $465 million in stimulus funds in its first round of low-interest loans for advanced transportation projects. Second, it could use the sale to raise money to get its hotly anticipated Model S sedan out the door by its 2011 due date.

Tesla is one of several cleantech companies anticipated to go public as soon as next year. When A123Systems shocked the market with its blockbuster IPO in late Sepember (its share price jumped 50 percent on opening day), many analysts, including the Cleantech Group, said that the biggest public offerings in 2010 will probably come out of the green sector. In addition to Tesla, solar system maker Solyndra — which received $535 million in loan guarantees fro the DOE in March — and smart grid communications provider Silver Spring Networks have also been named as likely candidates.

Tesla filing to go public would cap off a year of consistent wins for the company, which began with Daimler taking a 10 percent stake ($50 million) in May. After that, it nabbed the millions of loans from the DOE, followed by $82.5 million from Daimler, Aabar Investments and Fjord Ventures in September. It declared profitability in July and purchased space in thePalo Alto-based Stanford Research Park for its new headquarters and smaller assembly operations. On top of that, it opened swanky showrooms in New York, Seattle, Munich, and other major markets.

The company has now raised $783 million from a wide-ranging field of investors including Compass Technology Partners, Valor Equity Partners, Capricorn Management, Google (and its founders Sergey Brin and Larry Page), JP Morgan, VantagePoint Venture Partners, Draper Fisher Jurvetson, Technology Venture Partners and of course its CEO Elon Musk.

Daimler Acquires 10% Stake In Tesla Motors
A $50 million vote of confidence by the German giant
could give a jolt to Tesla's plan for an electric sedan
Story from Business Week

Electric car startup Tesla Motors has a new partner: German giant Daimler (DAI). On May 19, at the fashionable Hay-Adams Hotel in Washington, Daimler announced it has taken a 10% stake, worth about $50 million, in the San Carlos (Calif.) auto pioneer.

The two companies had already been working together. Daimler was planning to build 1,000 all-electric versions of its small Smartcar using Tesla's battery technology. But Daimler wanted more than just a simple supplier-customer relationship, explains Dieter Zetsche, chairman of the board of management of Daimler and head of Mercedes-Benz Cars. "We are in a time of change," he says. "This industry is going through a kind of paradigm shift, and has to reinvent itself ultimately to be independent of petroleum and without CO2 emissions. We need fast technology change."

Making changes fast is hard for big companies. So more than just looking to Tesla for new technology, Daimler wants an infusion of entrepreneurial spirit. "We want to think out of the box," says Zetsche. "We want to go down new paths, and we believe the combination of such a young, very ingenious company and a very experienced, longtime successful company is a good one in order to find new approaches fast."

Selling New Shares to Daimler

The deal brings credibility as well as money to five-year-old Tesla, which has garnered headlines for both its speedy Roadster as well as for its recent stumbles. "It validates the effort Tesla has made in pushing the electric vehicle," says Jeff Schuster, executive director for forecasting for J.D. Power & Associates (which, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP)). "It certainly is a boost to that company to have a company like Daimler investing."

Indeed, Tesla CEO Elon Musk says Daimler's prestige and technology were major factors in the deal, which involves selling new shares to Daimler. "We actually could have gotten a higher price from another investor, but we would have done so without the strategic advantages," Musk says. "It gives everyone a higher confidence in our plan."

That confidence has been shaken a bit recently. The Roadster had cost overruns and delays, and the company has suffered through layoffs and the firing of its first CEO. Now, Tesla has a plan to offer a less expensive but still speedy electric sedan, the Model S, for $49,900. But Musk needs $400 million more to put the car into production. He hopes to get much of that from two federal Energy Dept. programs to support green technologies. But he hasn't snared the funding yet, and some auto experts and ex-Tesla employees doubt the company can pull it all off. "There are lot more steps to go before Tesla is a viable car company," says George Peterson, president of automotive consulting firm AutoPacific.

Tapping Daimler's Expertise

Musk hopes that the deal with Daimler will help put some of the doubts to rest. "It's important to recognize Daimler is very meticulous," he says. "A huge part of their commitment is due to the Model S. They've gone through the Model S development costs line by line."

As part of the deal, Daimler will help Tesla with the new car's engineering. "Tesla is interested in some components, some knowhow, and some technology to add to their vibrant, very energetic startup approach," says Zetsche. In particular, Musk anticipates tapping into Daimler's expertise in areas like noise and vibration reduction, plus safety and quality. "They are very interested in helping us. They see us an important test case for market acceptance of electric cars," says Musk.

Tesla launched the Model S on Mar. 26. It claims to have more than 1,000 reservations for the all-electric sedan, which can carry seven people and travel 300 miles on a single charge. Tesla is asking for $5,000 deposits (or $40,000 for a special collectors' edition). The car won't be delivered until late 2011 at the earliest. "If they can get that thing on the road, they'll have a winner on their hands," says AutoPacific's Peterson. "The challenge will be to make an aluminum body at that price."

Daimler Investing in Batteries

There are questions as well for the whole auto industry as to which technologies will win out as it tries to respond to the demand for more efficient cars. Daimler is expecting that diesel-powered cars will be a major component of its strategy for meeting President Obama's tough new fuel economy standards. The company is working on hybrid gas-electric vehicles as well. But electric vehicles offer the potential for the greatest reduction in emissions. That's why Daimler has already invested in German battery maker Li-Tec, and has founded a joint venture with Evonik Industries to make its own batteries.

Zetsche says that Tesla's battery approach was "the fast one," but that he expects Li-Tec's version of the same basic lithium-ion technology to be more efficient. In the long-term, he expects, Tesla might consider using the Li-Tec batteries as well.

So Teslas may pick up a bit of a German accent. But don't expect the cars to be sold at Mercedes dealerships anytime soon. "In major markets, I want to control that customer experience," says Musk.

GE Backs Out Of Funding For Tesla Motors
Originally Posted to AllCarsElectric.com

In a recent interview with Car and Driver magazine, Tesla CEO Elon Musk leaked news that GE would invest funds into Tesla Motors. The news spread quickly. It seemed as though Tesla, who has been in and out of financial trouble constantly, had finally secured a source for some funding. But like other past investors, GE withdrew.

On the day that GE was to wire funds to Tesla, they did not. The funds were never sent, no deal was reached, and Tesla Motors would have to continue their search for money. GE cited a budget restructuring and budget constraints as reasons for withholding the funds, but many feel its simply lack of assurance that Tesla Motors can be successful.

Tesla is searching for funds from the federal government and private investors, but their search has provided almost nothing. Tesla CEO Elon Musk is still the primary investor into the company and nothing at this point seems to suggest that will change. Tesla has only been able to raise about $40 million from other sources and needs substantially more funding to carry on its operations.

Billionaire Musk has the money to support the company, but it would not be profitable for him to provide funding alone.

Larry And Sergey Help Fund Tesla's Model S
As Posted to eWeek

Google co-founders Larry Page and Sergey Brin are major investors in Tesla Motors, which on March 26 revealed the prototype of its all-electric, zero-emission sedan, the Model S.

The vehicle, which can accelerate from 0-60 mph in under 6 seconds and hit a top speed of 130 miles per hour, will feature a 17-inch touch-screen with 3G connectivity, allowing drivers to check Google Maps or other data. The car’s electrical charge could also theoretically be monitored via an iPhone or a laptop, according to the company.

Tesla hopes that the Model S will eventually lead to a mass-produced electric vehicle, but production hinges on whether the Department of Energy will provide a $350 million loan to help kick-start production.

"This is just the first of many mainstream cars we’re developing," Elon Musk, CEO of Tesla, said in a statement. Musk was a co-founder of PayPal and founder of SpaceX.

Musk went on to cite the ownership cost of the Model S, should it enter production, as "similar to a gasoline car with a sticker price of about $35,000" once the lower cost of electricity versus the likely future price of gasoline was taken into account.

The company anticipates that the base price of the Model S will stand at $49,900, once federal tax credits totaling roughly $7,500 are factored in; it will come with a choice of batteries with either a 160-, 230- or 300-miles-per-charge range.

Deliveries of the vehicle will begin in 2012; those interested can visit this site to put their name on what will presumably be a long waiting list, if sales of the Roadster, Tesla's first electric car, are any indication.

The Roadster, currently in production with a price of just over $109,000, can go from 0-60 mph in 3.9 seconds and travel 244 miles per charge. There is a substantial waitlist for the vehicle, which was unveiled in 2006, three years after the founding of Tesla Motors.

Starting this spring and continuing through 2009, Tesla will open stores in Chicago, London, New York, Miami, Seattle, Washington and Munich.

Both Page and Brin, who’ve made no secret of their green IT leanings, were early investors in the company.

Should the Model S enter production, it may very well have a variety of technologies already in place to help meet drivers’ commuting IT needs. Intel rolled out four new Atom processors on March 2 designed to fit into a wider variety of devices, including those embedded in car dashboards; those processors will be paired with the Microsoft Auto software platform, designed to provide features such as mobile device integration and speech recognition.

The Model S’s promised 3G connectivity will allow drivers to connect with Google Maps, Internet radio and other tools.