Abu Dhabi plugs into Tesla IPO

Electric car maker's offering is first of its kind in 50 years

Workers assemble a Tesla Roadster in California. The car maker has posted losses in every quarter since its founding in July 2003.

Tesla Motors, the electric sportscar maker part-owned by Abu Dhabi investors, will make the first initial public offering (IPO) for a US vehicle manufacturer in more than half a century tomorrow. The maker of the US$109,000 (Dh400,346) Tesla Roadster is seeking to raise as much as $178 million to pay for factories and possible acquisitions, the California-based company said in regulatory filings ahead of the IPO.

The IPO will be the first by an American car company since Ford Motor went public in 1956, according to the New York Stock Exchange. Aabar Investments, an Abu Dhabi company that bought 9.1 per cent of Daimler last year, acquired a 4 per cent stake in Tesla from the German car giant. Other Abu Dhabi investors, including a division of the Abu Dhabi Water and Electricity Authority called Al Wahada Capital Investment, own stakes in Tesla, according to regulatory filings. Al Wahada owns almost 8 per cent.

Elon Musk, who has staked his personal fortune in Tesla after selling a pair of internet businesses called PayPal and Zip2 for almost $300 million, is counting on investors to fund a start-up that expects to lose money in the next two years as it tries to build a battery-powered sedan. While the IPO may benefit from Tesla's standing as the only producer of electric cars sold in the US that can be legally driven, cheaper alternatives from established car makers may keep the market challenging for Tesla, according to the US-based Rochdale Investment Management.

Electric-car technology has been supported by policymakers in the US including Barack Obama, the president, as a way to reduce the nation's oil use and dependence on foreign energy sources. Mr Obama set a goal of getting a million plug-in hybrids and electric cars on to US roads by 2015 and subsidised Tesla with a $465m loan from the department of energy to develop the company's cars. Mr Musk, Tesla's chief executive officer and its biggest shareholder, co-founded PayPal, the online payment company now owned by the California-based eBay, and is also the chief executive of Space Exploration Technologies, another California-based company that builds spacecraft.

He has spent more than $70m of his own money on Tesla while selling about 1,000 Roadsters to film stars, musicians and battery-car advocates. While the car maker has burnt through $230.5m in cash and posted losses in every quarter since it was founded in July 2003, Tesla attracted Toyota, the world's largest car maker, which plans to buy $50m of shares alongside the IPO. Tesla and Toyota said they may co-operate on electric vehicle development, although they have not signed agreements to do so, filings show. The search engine giant Google's founders, Larry Page and Sergey Brin, are also investors.

Tesla's net loss in the first quarter almost doubled to $29.5m from a year earlier. The deficit is more than half the $55.7m the car maker lost last year. Tesla is selling a 12 per cent stake of 11.1 million shares at $14 to $16 each in the initial offering, according to its filing with the US Securities and Exchange Commission. That includes 1.1 million shares that existing stockholders including Mr Musk will unload.