Tesla's clean streak

The most excitement on US stock markets this past week has been generated by the IPO of electric car company Tesla Motors: not just because it made one of the most successful market debuts in recent years, but because of what it might mean for the future of cleantech investments.

In a year that has seen several high profile cleantech companies pull their IPOs because of volatile markets, Tesla defied expectations by making a stellar debut last Wednesday, despite concerns about its financials. It raised $US226 million at $US17 a share, well above the expected range, and saw its stock surge to over $US30 a share on its first day before investors, looking for quick profits and possibly mindful of its shaky balance sheet, sold it back down to below $US20 a share by close of trade on Friday.

The Palo-Alto company has achieved something close to a cult status in Silicon Valley since it first began selling its high-end all-electric roadsters in 2008. Never mind that it has barely sold more than 1000 of them – at around $US109,000 a pop – and is losing so much money some question if it can survive.

It is the first US automobile company to list on the market since Ford in 1956. But its significance is broader than that: as company founder Elon Musk (who also founded Pay Pal) noted in his pre-IPO roadshows, Tesla is a lot closer to an Apple or a Google than it is to a GM or a Ford.

Indeed, Tesla represents the advance guard of a technology that has the potential to revolutionise not just the multi-trillion dollar global car industry, which some tip could be at least 50% electrified by 2030, but also lead to fundamental and radical changes to the nature of the oil industry and the stationary energy industry too.

That seems to be the least understood aspect of the cleantech revolution. These are not just stepping stone developments that might make a business more efficient or profitable, many of the technologies will lead to long-standing business models being turned upside down. It is a massive threat to some, but an enormous opportunity for others.

And many of those others are established multi-nationals. A survey released late last week by Cleantech Group and Deloitte found that global venture capital investments had bounced back to a record $US4.04 billion in the first half of 2010. One of the highlights of the survey was the large corporate interest in the sector, with firms such as Intel, GE, Shell, Alstom and Cargill all involved in the second quarter's top 10 deals.

The success of Tesla was being viewed as a bellwether listing for the greentech sector, particularly after the withdrawal of the Goldwind and Solyndra IPOs.

Tesla itself is credited for bringing new life to the electric car, and for inspiring GM to make its own push into the EV market and the creation of the soon-to-be released Chevy Volt. The irony of Tesla's success is that it now has a market capitalization of more than $US2 billion, more than double the market value of GM before it was placed in bankruptcy in June, 2009. Now, after being recapitalized and investing in EVs, GM is poised to make a triumphant return to Wall Street and is said to be eyeing a raising of up to $US20 billion.

Tesla has also attracted interest from Daimler, which has a 10% stake, and Toyota, which agreed to buy $50 million of stock as part of a joint venture agreement signed in May to re-open one of its Californian auto plants.

But despite its greater significance for the cleantech, motor and energy industries, Tesla may ultimately be the victim of its own success. It has lost more than $US250 million and is currently selling only 10 cars a week. It is still to release the proto-type of its planned, cheaper, family sedan model due to be released in 2012. And it will soon face competition, not just from GM, but Nissan, Ford, Fisker Automotive, Toyota and others.

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