Tesla IPO Update #2: Roadster Production to Stop in 2011, New Model Due in 2013By John O'Dell January 31, 2010
Ending Roadster Production, at Least for Awhile, Has Always Been Part of the Plan
Buried in all the paperwork filed Friday with its notice of intent to go public was this item regarding Tesla Motors' game plan: The company intends to stop manufacturing its Roadster model next year but will resume with an updated, upgraded second-generation Roadster in 2013.
The news is making headlines, but it isn't really all that surprising. Tesla has always said that the Roadster that launched it in 2008 as the first modern manufacturer of a roadworthy, highway-legal electric car wasn't going to be forever.
Heading down the road: Tesla says Roadster production to end next year.
Executives told us two years ago that they planned to make and sell only 1,600 of the first-generation car before moving on to a new model. So far, just under 1,000 have been sold.
Tesla CEO Elon Musk also told us last year that the present Roadster would be replaced in 2013 by a larger, four-seat model.
What could be unsettling though is the timing. The company said it its initial public offering filing with the Securities and Exchange Commission that it would cease production of the first generation Roadster next year because Lotus Cars, which makes the Elise chassis and body on which the Tesla is based, is retooling and will shut down that line.
That will leave Tesla without revenue from car sales until its next planned model, the $57,400 (before tax credits), five-seat Tesla S electric sedan, comes on line - an event originally planned for 2011 but now slated for sometime in 2012, if all goes well.
We can't tell you if that's a surprise to Tesla or something the company's known and planned for all along.
Tesla officials are citing their IPO filing as an excuse for not saying anything to anybody in the media about anything to do with the company for fear of violating restrictions on stock-hyping before a public offering.
Tesla did say in Friday's filing, though, that that it hopes sometime this year - no target date was given - to raise at least $100 million in its first public stock offering.
The absence of a product to sell for months, perhaps a year or more, isn't likely to be something that strengthens the confidence of many potential investors.
Tesla's got a lot of fans and can probably sell its first stock issue - it can offer them as surety of sort the fact that it likely can tide itself over with the proceeds of a $465 million federal loan and the income stream from sale of its battery packs and battery management technology to Daimler for the upcoming Smart EV.
Chelsea Sexton, co-founder of Plug In America,a leading advocacy group for battery-electric cars, sees it this way: "Folks are making too much of the temporary suspension of Roadster production- it's a supplier and logistics issue, and things can change between now and then, as often does in the auto industry. But Tesla has also committed to the Model S - to its investors and employees, to the public, and to the US government - and focusing on that product is necessary, even if it means re-allocation of internal resources."
But if production of the Tesla S is delayed again - and delays are all too common in the world of auto development, especially when the company doing the development is a relative newbie to volume production and hasn't even started to build its assembly plant - things could get sticky, to say the least.
That said, it's probably not a terribly bad thing that the present Roadster will see the end of days next year.
Tesla is going to have its hands full getting the Model S ready to roll, and it doesn't need the distraction of trying to keep an aging $109,000 plaything for the wealthy fresh enough to continue selling.
The company's filing says it plans to launch a second-generation Roadster in or around 2013 (we're betting it won't be based on a Lotus and may use an original Tesla design), and if Tesla does make it that far we expect that Roadster II will benefit from the development and engineering work done on the Model S.
A new roadster also could cost considerably less than the first-generation version.
If the Model S does make it to market and sells anywhere near Musk's goal of 20,000 a year, the economies of scale should help bring down battery and power management costs for a new Roadster and for the EV that Tesla has always held out as its ultimate goal - an affordable ($30,000 or so) mid-size car that will compete with other mass-market autos and complete the transition from Northern California start-up into full-fledged American car maker.
We wish 'em well, but it's looking like a long, uphill climb.
John O'Dell, Senior Editor