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Sunday, June 27, 2010

Tesla Motors IPO to Test Demand for Green Technology Stocks

The Tesla Motors initial public offering this week will be a bellwether for investor confidence in green technology, analysts say.

Telsa will raise nearly $US200 million ($229m) tomorrow in one of the most eagerly awaited IPOs of the year because it is a "technology velociraptor", according to its founder and chief executive.

Elon Musk does not mean that his electric car company is a dinosaur.

Quite the opposite.

He is counting on the company's image as an agile, Silicon Valley high-tech predator to help it to raise at least $US185m from the sale of 11.1 million shares priced in the $US14 to $US16 range.

Mr Musk has been running a pre-IPO roadshow to drum up business.

"We're closer to an Apple or a Google than we are to a GM or a Ford. There will not be anybody that will bring technology to market faster than Tesla," he said in a video presentation.

Touted as the first American car company to go public since Ford in 1956, the Tesla IPO will be a bellwether for investor confidence in green technology and the future of the car industry, analysts say.

The company, based in Palo Alto, California, has won many admirers for its all-electric Roadster sports car, which sells for $US109,000 in the United States, but questions remain about the company's viability.

Tesla has had years of losses and admits to an uncertain production schedule for its battery-powered cars.
The company sells only the Roadster, a high-end car powered by lithium-ion batteries with a design based on the Lotus Elise two-seater sports car. It has sold only 1063 Roadsters since 2008 and has lost $US290m since the company was founded in 2003.

Revenue has totaled $US147.6m. Tesla has said that it will end production of the Roadster in 2011 and start selling a mass-market luxury sedan in 2012 priced at a more affordable $US49,900. The Model S will have a top speed of about 145km/h and a range of more than 161 km between recharges.

In a 30-page risk-factors entry in its IPO prospectus filed with the Securities and Exchange Commission, the company said that it expected continuing quarterly losses until the Model S hit the market.

Tesla has taken $US19.7m in 2200 reservations for the five-seat car, for which it has still to finalize a production-ready prototype. After the Model S, Tesla plans to continue expanding its line-up of electric cars with increasingly cheaper models.

However, the company has been forced to deny that the IPO will be affected by a divorce dispute between Mr Musk, a South African who co-founded the online payments company PayPal, and his estranged wife.    Source theaustralian

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