The Palo Alto, Calif.-based Tesla, purveyors of all-electric performance vehicles, may be located in the Silicon Valley, but it is anything but a new startup with a suspect business model.
Shares of Tesla (Nasdaq: TSLA) jumped almost 5 percent last Friday, after the company reaffirmed its timetable for releasing its upcoming all-electric performance sedan for the 2012 model year.
At the company’s first-ever shareholder meeting following its IPO last year, CEO Elon Musk, from the iconic former Toyota-General Motors NUMMI auto plant in California, gave his vision for the company.
Musk said that the company recently purchase a hydraulic stamping press—the largest of its kind in North America—to assist with the production of Model S sedan.
The Model S will begin production later this year, probably in the third quarter, Tesla said. The car, which starts at around $57,000, will compete with the Audi A6, BMW 5-Series, and Mercedes-Benz E-Class, and can accelerate from 0-60 mph in around 5.5 seconds. Of course, it also has zero carbon emissions and comes with the usual $7,400 federal electric car tax credit.
If the Model S sedan can begin production on time, it would be a major coup for Tesla. The all-electric vehicle will be the first luxury all-electric sedan and the second production car for Tesla. It currently manufactures the Roadster and Roadster Sport, both two-seater sports cars.
New Share Sale for SUV
But Tesla doesn’t just have one new model in mind. In fact, the company is planning a second round of share sale to finance an all-new crossover SUV called Model X.
The Model X will be a model year 2013 vehicle and a rechargeable all-electric luxury SUV. Musk says that the company plans to sell it in late 2013 and it will be based on the platform of the Model S.
Tesla will sell roughly $234 million in stock—a follow-on offering of 5.3 million shares at $28.76 per share, as well as a private placement offering for affiliates, including current shareholder Daimler AG.
In the first quarter of 2011, Tesla reported topline revenues of $49 million, more than double its revenues in the first quarter of 2010. But being a startup and capital-intensive company, it lost $48.94 million, meaning its expenses were almost double its revenues.
But once its Model S sedan begins selling, the losses could quickly turn around due to high gas prices and the push to go green. Tesla also has an agreement with Japan’s Toyota Motor Corp. to develop an electric version of Toyota’s RAV4 small SUV.
“Tesla is well positioned to be a highly profitable, niche luxury car company,” said Pacific Crest Securities in a research note last month.
Investment bank Goldman Sachs is the sole underwriter for the share offering.
Shares of Tesla have gained $3.50, or 13.1 percent year-to-date, based on Friday’s closing price.
