The last US auto company IPO was in 1956 when the Ford (NYSE:F) family decided to sell part of its company to the public while maintaining voting control though a special class of shares.
Luxury electric car company Tesla plans to raise $100 million by offering some of its equity to public shareholders. The small auto firm filed an S-1 with the SEC in preparation for raising the money.
The SEC document paints a picture of a company that needs money quickly. Tesla’s accumulated deficit through September 30 of last year was $236 million. Tesla lost $32 million in the first three quarters of 2009. The company had only $106 million in cash at the end of September.
Telsa’s other important source of funds is the Department of Energy, which has given the firm a $465 million loan to build its Model S roadster. Taxpayers have a piece of Tesla just as they do GM and Chrysler
Telsa faces long odds even with access to several hundred million dollars. It will build high-end cars which will compete against hybrids from large, established car companies including Cadillac and Lexus. These companies have dealer networks and significant marketing budgets. They also have existing manufacturing facilities and distribution networks to get vehicles to dealers.
Another roadblock for Telsa is that its base model sells for $109,000 and the sport version of the car has a sticker price of $128,500. Even in a robust economy, selling many cars at that price would be a challenge.
One of the most famous luxury car start-ups was DeLorean, founded by a former GM executive in 1981. The company went bankrupt in 1982.
Douglas A. McIntyre
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