With its impending IPO, the first for a domestic car company in 54 years, Tesla is feeling pretty bullish about its chances for success. The company just announced it plans on adding 2.2 million shares to its public offering later this week, increasing its size by 20% and generating roughly $30 million in additional capital for the company.
Despite the demand that is clearly driving this IPO expansion, I remain cautious on the company's prospects. I love the technology, I really love the Lotus-like Roadster, and I hope Tesla becomes the U.S.'s fourth viable automaker after Ford
However, I can't help but be reminded of the A123 Systems
Tesla is in a similar position. It has struggled to make a profit, with losses widening to $29.5 million during the most recent quarter. The company has turned to non-core activities, like selling carbon credits to Honda
Tesla's success likely lays with its partnerships with industry giants Daimler and Toyota
I think that rather than becoming purely a GM rival, Tesla will look more akin to Magna International
If Tesla becomes primarily a technology supplier to larger companies and offers a handful of vehicles, is that much different from Magna's potential future? Is that worth all the hoopla surrounding the IPO? Is it worth paying a premium for once shares flood the market? I don't think so, but I would love to hear the Foolish community's take in the comments below.