

Elon Musk Says 'Goal Is to Remain Independent' After IPO - MikeCapone
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/06/29/bloomberg1376-L4S4UD6LUTXF01-2RASSOV3MITLLEEJ6KDL5FOKAF.DTL

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patrickgzill
One explanation for a high stock price is that various mutual funds focused on
investing in "green" tech, have more money than they have green companies to
invest in. Thus money is going into TSLA.

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illumin8
Sorry, you are no longer independent once you control less than 51% of the
company.

Is anyone else mystified by this run-up in stock price? Tesla seems to have
very little innovative technology (anyone can attach laptop batteries to a DC
engine) and competitive products like the Nissan Leaf and Chevy Volt will be
out this year that will beat them in price. Their flagship product will not be
released until 2012 or later. They don't manufacture their own cars and are
attempting to build a new factory and learn about auto manufacturing while
they are doing it.

Don't get me wrong, I'm glad they're doing what they are doing. The auto
industry needs someone to show them the way, but I'm just trying to see what
the upside of this stock is for an investor. I predict their cars will be nice
"proof of concept" vehicles, that will be copied by the Fords, Toyotas,
Hondas, and Nissans of the world and made into commodity vehicles.

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todayiamme
Elon Musk still holds 65% of the company. In fact, it is a pre-requisite of
the US Govt. loan that he does so.

On the other hand I wish that making an electric car was as simple as
combining a motor and a battery. It isn't. To achieve maximum performance out
of a vehicle the motors need to be specially designed and integrated into a
powertrain that is suitable for mass reproduction. It is quite easy to make a
one off design but tooling a factory that produces your design within
tolerances everyday is quite another beast.

In fact, they faced challenges in tooling existing factories to make the Tesla
Roadster to their tolerances
([http://en.wikipedia.org/wiki/Tesla_Roadster#History_of_produ...](http://en.wikipedia.org/wiki/Tesla_Roadster#History_of_production)).

I would invest in Tesla Motors in a heartbeat if I had the money, because they
have conclusively proven that well designed battery electric vehicles can be
mass produced and can work in the real world. Most of the other manufacturers
are still in the proto-typing phase and if they ever release their products
out then it won't be without significant growing pains.

So, yes they are unique.

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jakarta
Is it really wise to invest in companies that depend on loans from the US Govt
to operate? I'm not too sure.

I've been pretty impressed with BYD:
<http://en.wikipedia.org/wiki/BYD_Company>

At the very least, with BYD you have the chance to get one of the world's
leading manufacturers of batteries as downside protection in case the
automobile business does not pan out.

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gte910h
Is it really wise to invest in companies that require venture capital to
operate?

A loan is merely one way of getting funding.

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jakarta
There's a big difference between getting VC funding and getting a loan from
the US Govt. The US Govt is going to be more likely to loan to businesses
where the underlying economics just aren't there -- which is why the private
sector is unwilling to fund the business.

Also, I think it is incorrect to equivocate equity investing with debt
funding. When you are making a loan, you are mostly betting on the survival of
the business. If they survive long enough to pay back your loan, with
interest, it is a win for you (the lender). When you are investing in the
equity you are actually owning a piece of that business and the future cash
flows that come to it. In that sense, you are betting not only on its survival
but also its ability to thrive.

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gte910h
> The US Govt is going to be more likely to loan to businesses where the
> underlying economics just aren't there

Dot com boom? Something like 30-60% of venture backed businesses outright
fail, and only 5-17% are hits. I'd say you're not looking for a much better
outcome on venture funding being a predictor of 'how well the economics are
there'

Truth is, governement loans + earlier IPO lets them keep tons more equity, and
allows more measured growth (both of which are important when creating real
world products, as opposed to electronics/software, which have a smaller
manufacturing footprint than say, experimental cars). The transmission issues
alone would have been hideous to deal with under a VC.

