Giant gas-guzzling GM goes belly up; tiny electric Tesla Motors thrives

Last week, SFGate noted that tiny Silicon Valley electric car company Tesla Motors was worth half of General Motors, the largest car company in the world.

With one roadster on the market and one sedan in prototype, Tesla, thanks to Daimler’s 9 percent stake [$50 million], is valued at $550 million. GM sold 8.35 million vehicles worldwide in 2008; its market value as of Thursday was $1.17 billion, based on the closing stock price of $1.92.

A week later, as GM files for bankruptcy, Tesla is worth more than GM.

It’s another sign that the nation’s economy is shifting as swiftly and dramatically as are its politics. The government-promoted decades-long U.S. auto-industry SUV craze will undoubtedly rank as one of the most disastrous business moves in history, a lesson for business school textbooks for decades to come. Stories like the decline of GM and the rise of Tesla are likely to multiply in the the next few years and to center on places where investors come together with companies working on renewable-energy products, places like Silicon Valley and the Denver-Boulder corridor.

Tesla has made its name by designing and manufacturing high-end electric sports cars, going at the new technology with the kind of passion and confidence utterly lacking in Detroit for decades.

Early investment in Tesla reads like a future history of the beginnings of a new American auto-industry, featuring mostly Silicon Valley personalities and cash.

From wikipedia:

The initial, Series A investment round of USD$7.5 million was led by PayPal co-founder Elon Musk in April 2004 and included Compass Technology Partners. Musk, a South African-born entrepreneur, became Tesla’s Chairman of the Board and in February 2005, led Tesla Motors’ second, USD$13 million Series B investment round which added Valor Equity Partners to the funding team. Musk co-led the third, USD$40 million Series C round in May 2006 along with VantagePoint Venture Partners. Tesla’s third round included investment from prominent entrepreneurs including Google co-founders Sergey Brin & Larry Page, former eBay President Jeff Skoll, Hyatt heir Nick Pritzker and added the VC firms Draper Fisher Jurvetson, Capricorn Management and The Bay Area Equity Fund managed by JPMorgan Chase.

The Tesla Roadsters price tag is something like $130,000 but it costs only about $0.02 per mile to drive. Instead of bailing out Detroit, maybe the government could buy and distribute Teslas around the country for $5,000 apiece. Obama could create a nation of electric sports car drivers, a kind of publicly funded national midlife crisis splurge to make us all feel a little more pep during the recession!

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About the Author

John Tomasic

Writer, editor, teacher, web wrangler. He has worked for art, business, culture, politics publications, five universities and a UN war crimes commission. @johntomasic
jtomasic@coloradoindependent.com | 720-432-2128 |

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