Tuesday, February 22, 2011

Tesla Teaser

At my daughter’s urging I accompanied her to the New York City showroom of Tesla Motors (TSLA:  Nasdaq).  Ever the environmentalist she is intrigued by the idea of an all-electric vehicle.  Tesla has made much of the performance of its sporty all-electric cars.  I will admit that the Tesla models have some appeal even if slightly squat in appearance.  My daughter was impressed by the sleek aero-dynamic contours of the Roadster and had pictures taken by a very red "teaser" in the showroom window. 

Tesla boasts its Roadster can achieve 60 miles per hour in 3.7 seconds and reach speeds as high as 125 miles per hour.  The Roadster is powered by a custom lithium-ion battery that takes three and a half hours to charge from empty to full using the Tesla High Power Wall Connector.  The smaller Roadster is expected to have a range of 245 miles on one charge.

The Model S comes standard with the 160-mile range lithium-ion battery system that charges overnight with a 220 outlet.  A 110 outlet would take longer.  Tesla is planning 230-mile and 300-mile range batteries as optional upgrades.  Even the smaller battery pack is daunting in size.  Tesla expects the battery to last up to 100,000 miles before needing replacement, although with no history of actual use by consumers, this is as much wishful thinking as anything.

Tesla is busy promoting its cars and expects to begin delivering on orders in 2012.  Holders of TSLA shares are waiting with bated breath for that surge in revenue, hoping they are not being teased by Tesla's shiny cars.  The Company recorded $116.7 million in total sales in the twelve months ending December 2010.  Unfortunately, the net loss was $154.3 million.  Tesla has $100 million in cash on its balance sheet to support operations until production gets into full swing.  Considering the Company used $127.8 million in cash during 2010 that cannot be too soon.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. TSLA is included in Crystal Equity Research’s The Mothers of Invention Index in the Electric Vehicles Group.

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