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If there was ever an IPO that could create positive vibes, it's Tesla's. The company, which is rumored to be planning an IPO, is nothing if not a "green" technology play, with its all-electric cars not consuming a single drop of gas. It's a success story for the U.S. auto industry, which can use all the good publicity that it can get. And it's a story that can also make technology enthusiasts and car aficionados smile, with Tesla's lightning-quick, futuristic Roadster looking and performing like it came straight out of The Jetsons.
Tesla is also very much ahead of its time, and it's going to have its work cut out for it competing against auto giants who are keeping one foot planted in the present.
The recharging blues
For Tesla, as with many technology pioneers looking to make it big, the devil lies in the details. While its cars can be recharged by plugging into standard electrical outlets, they can take quite awhile to do so. Using a high-power recharging kit that can be installed in a residential garage, Tesla claims that the Roadster will take roughly four hours to recharge. I'm pretty sure that's a little longer than your average stop at a gas station.
And if you run out of juice away from home, things get even worse. Using Tesla's "Universal Mobile Connector" for connecting to electrical outlets, the amount of time needed to recharge increases anywhere from six hours, if you've got access to the kind of outlet used for dryers and RVs, to a full 48 hours, if you're crazy enough to use a conventional home outlet.
Tesla's upcoming Model S sedan will come equipped with a portable, 440-volt charging kit that can cut down on recharging times significantly -- perhaps to less than 30 minutes for 80% recharging. But right now, there aren't any 440-volt charging stations available to the public. That's going to change over time, but these stations are unlikely to provide a fraction of the convenience that gas stations do for the foreseeable future.
Attack of the plug-in hybrids
The auto giants are well aware of all this, and that's why they're focusing their investments not only on pure electrics but also on plug-in hybrids, which can refuel through both the grid and the gas station. General Motors' much-hyped Volt is expected to go on sale late next year. But Toyota (NYSE: TM ) has been making waves of its own, with plans to offer a plug-in version of its Prius hybrid in 2011, and Ford Motor (NYSE: F ) is looking to offer plug-ins starting in 2012. Chrysler has reportedly demoed a plug-in hybrid that allegedly can, like the Roadster, go from 0-60 in less than 4 seconds. That's bad news for Tesla, though maybe good news for A123 Systems (Nasdaq: AONE ) , which is going to be supplying the batteries for Chrysler's plug-ins.
As it is, Tesla's cars are luxury items targeted at buyers who are wealthy enough to handle their high price tags (the Roadster starts at $101,500, while the Model S is expected to start at a "mere" $49,900). And they likely can't be used as an owner's only car, due to their charging issues. Once plug-in hybrids hit the scene, that niche could have trouble holding up as well.
Throw in the massive costs involved in Tesla's attempt to go mainstream -- $365 million (78% of the Department of Energy's loan) is headed to production and assembly for the Models S -- and you're looking at a potentially dicey investment. Even if it makes for a great feel-good story.