SALON

Tuesday, Jun 29, 2010 7:18 PM UTC

Tesla Motors outstrips expectations in first day of trading

The Palo Alto, Calif., company is the first car manufacturer to go public since Ford in 1956

By

Topics: Electric Cars, Wall Street,

Shares of Tesla Motors Inc. climbed in their trading debut after the electric car maker’s expanded initial public offering 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.

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. Tesla’s shares initially traded as high as $19, but quickly pared that gain and fell as low as $17.55 before rebounding. The company’s shares rose $1.37, or 8.1 percent, to $18.37 in afternoon trading.

The electric car maker, based in Palo Alto, Calif., is the first automaker to go public since Ford Motor Co. held its initial public offering in 1956.

Tesla CEO Elon Musk appeared Tuesday morning at the Nasdaq stock exchange at Times Square to mark the start of trading. At least five Tesla vehicles, including the $109,000 Roadster, were lined up outside, where spectators and tourists gathered to gawk at the cars.

“The response from investors has been tremendous,” said Musk. “We increased the size of the offering and the demand was still enormous, so we increased the price to a dollar above the top of the range and we still had massive, overwhelming demand.”

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.

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.

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 shuttered 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.

The company also has a high-profile CEO. Musk was a co-founder of Internet payment service PayPal. He currently runs rocket manufacturer Space Exploration Technologies.

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.

While Tesla is the first automaker to go public in decades, it likely won’t be the last. General Motors Co., which makes the Volt, is widely expected to sell stock to the public again, maybe as early as this year.

Tesla shares are trading on the Nasdaq under the symbol “TSLA.”

——

AP Business Writer Tali Arbel contributed to this report.

More Dan Strumpf.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 1 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations