DealZone

Tesla sticker shock?

May 19, 2009

Elon Musk

With highly touted plans for a new electric car in jeopardy, an overseas investor steps in to provide new capital and a much-needed endorsement.

GM? No, Tesla.

Remarkably, the terms of German automaker Daimler AG’s 10-percent stake in Tesla may have also helped the Silicon Valley electric-car start-up inch closer to GM in value.

Daimler’s vague disclosure of its purchase price as  “double digit million dollar” means Tesla is valued at a minimum of $100 million.
That would make Tesla, which was founded nearly six years ago, about one-eighth the size of 100-year-old GM.

A world away in Detroit, GM has seen its share price spiral downward to near $1.  That the price may fall to near zero if the automaker files for bankruptcy as is widely expected. It would be worth less than 2 cents if GM proceeds with plans to issue a flood of new shares to pay off creditors.

GM was worth around $768 million, making it by far the smallest component in the Dow Jones industrial average judged by market cap.

A bankruptcy judge would also cast doubts on the 2010 launch plans for GM’s Volt plug-in range-extended hybrid while Tesla’s all-electric and pricey Roadster is already on the road.

Tesla chief executive, financial backer and tech entrepreneur Elon Musk and GM executives have traded barbs in the past.

GM’s flamboyant former product chief Bob Lutz has described San Carlos, California-based Tesla as a “little West Coast outfit” that was stitching together laptop batteries together.

Musk, meanwhile, has shot back that GM’s range-extender technology in its still-in-development Volt was “neither fish nor fowl.”

Late last year, Musk, who also founded PayPal, couldn’t resist a dig when asked why GM, an early proponent of electric car technology,  had not bought his company. “I’m not sure they can afford Tesla right now,” Musk said.

Comments
5 comments so far | RSS Comments RSS

Tesla will likely not survive. They need at least $800 million to build their new sedan and they are loosing money on every roadster. Daimler will probably buy them for their technology, which is not nearly as advanced as they make it out to be.

Oh, and I know Musk likes to imply he founded Tesla (e.g. “who _also_ founded PayPal”), but he did no such thing. It wasn’t even his idea.

Posted by ckm | Report as abusive
 

I’m really happy to see Tesla doing so well, its an example of what should become the new American economy, hightech, innovative green technologies. And you can’t ignore this car is looking absolutely hot!

 

“That would make Tesla, which was founded nearly six years ago, about one-eighth the size of 100-year-old GM” – that’s pretty misleading. The reporter should look up the term “enterprise value”

Posted by BY | Report as abusive
 

With all the inconsistencies in this article it’s no wonder print journalism is bankrupt. The title is not even a good play on words. The rest of the article is misleading at best, creating open ended questions it fails to answer- Why is Tesla going to fail? I mean seriously, last I checked they haven’t even offered an IPO.

Posted by JournalistAreTheProblem | Report as abusive
 

What’s that about those not knowing history being doomed to repeat it?

I love how certain folks have labeled a 10% stake by Daimler being an indicator of success. Remember a few years ago when a certain “merger of equals” really turned out to be a “takeover” and eventually resulted in a big-o failure? Many are of the opinion that Daimler came in, picked up whatever technology was good for them and didn’t push for making technology roll the other way (Big deal, the 300C is underpinned by the then out-of-date Mercedes).

Can’t wait ’til Mr. Musk gets a lesson in true “global” business. Too bad it’ll be a small dent in his ego since he “went” to Stanford, “invented” internet commerce, electric vehicles, and space travel.

@ Nikkei: The Tesla is hot because it’s largely a less attractive modified Lotus Elise (now THAT’S hot)

Posted by ivan | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/