Tesla Motors had its IPO today on the NASDAQ stock exchange, raising more than $226 million in an offering of 13.3 million shares.   It is the first U.S. automobile IPO since Ford began trading publically more than 50 years ago.  Tesla, whose founder Elon Musk started and has enjoyed success in companies such as Paypal and most recently SpaceX, expects to release a relatively affordable fully electric sedan quaintly called the Model S sometime in 2012 to compliment its already available electric Roadster sports car.   It faces competition from Nissan and Chevrolet, both which expect to sell electric vehicles before 2012.

Tesla Model S

In addition to its $112 million 2009 revenue, the company has received $465 million in federal loans to develop electric vehicles.   It has never profitably operated and lost more than $55 million in 2009, despite claims by Elon Musk that “the company would already be profitable if it only made the Roadster and supplied powertrains.”   Tesla’s stock price soared on the NASDAQ in its first day of trading, up more than 40% in an indication of its perceived value.

As BP continues its effort to quell the raging oil leak in to the Gulf of Mexico, electric vehicles are receiving renewed attention as viable alternatives to the damaging and expensive effects of fossil fuels on the environment.   Unlike some other alternative fuel sources such as hydrogen fuel cells that require massive infrastructure and distribution channel upgrades, battery powered electric cars can recharge using standard electrical service.   Coupled with advancing methods of clean energy generation from renewable sources such as wind and solar on both local and regional scales, electric vehicles will help slash carbon emissions to stem global warming.

But electric car manufacturers like Tesla still face several hurdles.  While Chevrolet and Nissan have robust distribution channels, Tesla doesn’t and faces limitations in its ability to mass produce its product.  Consumers have no way of comparing the costs to operate an electric vehicle versus those of traditional gasoline powered cars.  If electric utility prices continue to rise, the direct cost per mile of electric cars may not actually benefit consumers, erasing one of the technology’s primary selling points.  The amount of time needed to charge an electric vehicle’s battery is much greater than fill times for gasoline fuel tanks.

Tesla’s success depends on its ability to solve these problems as well as design great cars that are safe and economical to operate and maintain.  If it does provide viable solutions, the ailing legacy car manufacturers of Detroit, already humbled by unpopular government sponsored bailouts, will face a new threat  - one that could yet again threaten their survival.