By Mike Ramsey
Tesla Motors Inc., the Silicon Valley electric car startup, said on Tuesday it would begin delivering its Model S sports car on June 22.
The all-aluminum body Model S is expected to be priced starting at $57,400, giving the Palo Alto, Calif., company a vehicle that could sell in higher volumes than its existing Roadster, which costs about $109,000.
The vehicle is being produced in a retrofitted section of a former Toyota Motor Corp. and General Motors Co. joint venture in Fremont, Calif. Tesla said it has 10,000 reservations for customers hoping to buy a Model S, which with accessories and battery upgrades can run to more than $100,000. It collects $5,000 from potential buyers to reserve the vehicles.
The launch of its new vehicle will be the key test of whether Tesla can become an established auto maker. Since mid-2009, Tesla has reported losses of more than $500 million. It has plans for third vehicle, a sport-utility vehicle called the Model X, to start production in late 2013.
Some other electric vehicle start-ups have already closed their doors, such as Azure Dynamics Inc. and Bright Automotive Inc. Tesla sold shares to the public in 2010 and despite continued losses, Wall Street analysts are bullish on the company. Of 13 equity analysts that have a rating on its stock, 10 suggest buying it. One rates the stock a “hold” while two recommend selling it.
Tesla shares were trading at $31.09, up more than 8%, in afternoon trading on Tuesday. Since Jan. 1, the stock is up about 14%.
In addition to making its own cars, Tesla has deals to supply Daimler AG and Toyota Motor Corp. with battery packs and power trains for electric vehicles, giving it a second revenue stream.
Tesla was awarded $465 million in loans from the U.S. Department of Energy, and has drawn about $360 million from that total so far. The money was used to finance 80% of the costs to develop the Model S and to retrofit the factory in Fremont.
The terms of Tesla’s loans were amended in February of this year and now require the company to keep enough money set aside so it can make principal and interest payments on its government loan through June 15 of 2013.
By Mike Ramsey