Electric Car Maker Soars in Stock Debut
You can't do anything about the timing but even in the face of a triple digit selloff in the stock market, shares of Tesla Motors Inc. rocked in their debut.
Shares rose as high as $25 a share before settling at $23.89, reflecting the enthusiasm among investors for Tesla's historic IPO, the first auto-related IPO since Ford Motor went public in 1956.
The electric car maker's expanded initial public offering also raised more money than expected. Tesla's performance was a feat in a sour market that has forced many companies looking to raise funds through IPOs to accept lower prices to get deals done.
The offering appealed to investors, raising $226.1 million after selling 13.3 million shares for $17 apiece. It had earlier expected to price 11.1 million shares at $14 to $16 per share.
But Tesla's IPO came on a day when U.S. stocks fell more than 2 percent - following Asian and European markets lower - on worries that the economy is slowing.
Even though the company hasn't had a profitable quarter since it was founded in 2003 - it has sold only 1,000 of its high-end Roadster sports cars - Tesla is a bet on the future of the electric car industry, which isn't currently a big draw for U.S. consumers. The IPO also comes at a time when volatile broader markets have dampened investors' taste for risk, particularly for companies with a history of losses or high debt levels.
Tesla's $109,000 electric Roadster sports car has received great reviews and Tesla is already taking orders for its $57,400 Model S sedan, which it plans to start building in 2012. The company is said to have raised over $250 million in funding, including investments from Daimler and Toyota, and received a $465 million loan guarantee to build its factory from the Department of Energy.
Investors are hoping that a planned lower-priced car will have a broader appeal. Tesla expects that a $50,000 four-door electric sedan, the Model S, which isn't slated to go on sale until 2012, will attract more buyers. Its goal is to build 20,000 of them a year.
The company has a prominent backer in Toyota Motor Corp., which last month agreed to sell Tesla a plant in Fremont, Calif., and invest $50 million in the company. Tesla plans to use the plant to build the Model S. Tesla expects annual net losses until mass production of the Model S.
But Tesla may face competition in the electric car market by the time the Model S is ready for consumers. Nissan Motor Co. is already taking orders on its electric car, the Leaf, which gets 100 miles per 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.
Tesla shares are trading on the Nasdaq under the symbol "TSLA."
CNET contributed to this report.