Thanks to all of you who bought Tesla Motors Inc. stock last week.
Someone has to subsidize the money-losing quest for electric cars, and I’d rather it be you, the investor, than me, the taxpayer.
Taxpayers are already on the hook via a $465 million loan facility to Tesla from the Department of Energy. So far, Tesla has never reported a profit and burned up $236.4 million since it was founded in 2003.
Never underestimate Silicon Valley’s ability to write up a money-losing business plan on a napkin and sell it to an unsuspecting public that won’t even take the time to read the fully disclosed “risk factors” on the stock registration statement.
Tesla opened its initial public offering on Tuesday at $17 a share. Its stock soared to $30.42 on Wednesday, an electrifying performance amid a market downturn that reinvigorated discussions about a double-dip recession.
But on Friday, Tesla stock closed at $19.20 as its batteries inevitably weakened.
Tesla was founded by Elon Musk, who also founded Internet payment system, PayPal Inc. Musk reportedly made at least $24 million from Tesla stock sales last week and still holds stock worth valued at more than $600 million. How’s that for pay, pal?
I keep reading that the goateed Musk, 39, was the inspiration behind the character from the Iron Man films played by Robert Downey.
Iron Man’s heroic flaw is that he is a narcissistic sociopath. Do you really want to buy stock from someone who is routinely compared to a fictional, narcissistic sociopath?
I rode in a Tesla Roadster in 2008. It went from zero to 60 mph in 3.9 seconds, redlined at 13,000 rpm, and didn’t make a sound as its g-force sucked me into the seat.
Back then, Tesla was still struggling to deliver the roadster that California Gov. Arnold Schwarzenegger had ordered. It didn’t even have a demo model of its own to show me, and had bummed the car from one its customers.
With a price tag of $109,000, I thought, man, this is a great machine for anyone with a nagging spouse.
Q: “Honey, can you go to the grocery store?”
A: “Sure, in about four hours when I’m done charging the battery.”
Tesla has done a remarkable job selling niche electric roadsters to millionaires and movie stars. So far, it’s got more than 1,000 of them on the road.
It estimates the batteries in these cars will lose 35 percent to 40 percent of their ability to hold a charge in seven years or 100,000 miles, at which time customers can buy new batteries for who knows what it will cost by then, or whether Tesla will still be in business.
“Such battery deterioration and the related decrease in range may negatively influence potential customer decisions,” Tesla notes in the “risk factors” section of its stock registration.
Tesla’s big plan, of course, is to sell a four-door luxury sedan called the Model S for about $50,000 a pop by 2012. Maybe it will be able to compete with the Chevy Volt, a plug-in hybrid that is supposed to come out, oh, I-don’t-know, eventually.
Tesla has a “drivable prototype” of the Model S, but not a production model.
The company also warns:
Tesla once dreamed of electric flying craft that would get their power beamed up from ground stations.
Man, would he be disappointed to see what his name is on in 2010.
Al Lewis: al.lewis@dowjones.com, 212-416-2617 or
