By Adam Lashinsky
July 1, 2010

Other than in the capital-raising department, Tesla has not succeeded yet.

I think it was the windmills that finally got to me.

I’ve been merely a passive observer of the Tesla (TSLA) phenomenon. I read Michael Copeland’s outstanding cover story in Fortune two years ago. I saw my first Tesla, a fiery red Roadster, only a couple weeks ago. I’ve never met with the company or heard its pitch.

Then on Tuesday, the day Tesla’s shares started trading in extraordinary fashion, I opened the Wall Street Journal and saw the Nasdaq ad welcoming Tesla to public companyhood. In the two-thirds-of-a-page photo, a bald guy in sunglasses drives a red two-seater past a bucolic mountain scene with an array of windmills between the car and the peaks. “The car company that abandoned oil selects NASDAQ,” reads the copy.  Between the copy and the photo, the message is clear: Tesla won’t foul the environment. It’s as pure as the wind.

There’s a big problem, however, with the imagery. Wind power represents about 3% of electricity production in the United States. Coal accounts for about 50%.  So while Tesla drivers may pat themselves on the back because their cars don’t emit foul greenhouse gases, half the electricity needed to charge the batteries that make the cars run comes from burning coal.

If this country were to embrace electric cars in a big way, we’d probably make our emissions situation worse, not better, for all the coal we’d need to burn — unless alternative forms of electricity generation suddenly put coal out of business, which isn’t going to happen.

Then again, straining the nation’s coal supply to fuel Teslas isn’t a big fear. Notwithstanding Tesla’s now $2-billion market value, this is a tiny, relatively irrelevant company. As of March, it had about 1,000 cars on the road. Its luxury sedan, the Model S, won’t go into production until 2012. And because it will wind down the current version of its Roadster before focusing on the Model S, “we anticipate that we will generate limited revenue from selling electric vehicles in 2012,” the company disclosed in its pre-IPO securities filings. Limited revenue. For an entire year. Two years from now.

Tesla is big in certain ways. It’s the recipient of a $465 million loan from the U.S. Department of Energy, $45.4 million of which it had drawn down as of June 14. (Question: Why is it that Tesla can update the status of its DOE loan as of two weeks ago but can only muster sales figures as of three months ago?) Tesla’s losses are big too: Through March it had an accumulated deficit of $290 million since being founded in 2003.

There was more to like in the Nasdaq newspaper ad. “Tesla builds highway-capable, zero-emission electric vehicles. No Hybrids. No  hydrogen. No hype,” it cooed. No hype. Well, there is CEO Elon Musk, the noted family man, pictured with fiancee and children in the papers Wednesday ringing the opening bell at the Nasdaq, who has referred to his car as a “freaking technology velociraptor.”

More drily, I enjoyed the section of Tesla’s IPO document where the company states that the Tesla Roadster has a range of 236 miles on a single charge. However, it continues, “Recently, the EPA announced its intention to develop and establish new energy efficiency testing methodologies for electric vehicles, which we believe could result in a significant decrease to the advertised ranges of all electric vehicles, including ours.” Details, details.

It seems fitting to end by pointing out that I wrote unkindly about another unprofitable company Elon Musk helped start, PayPal, which was a similarly hyped IPO in 2002. Though right about IPO silliness, I was wrong about PayPal’s prospects. I’m not saying Tesla won’t succeed. I’m suggesting two things: 1) other than in the capital-raising department, both from willing investors and hopeful taxpayer-funded governments, it hasn’t succeeded yet; 2) pictures of windmills aside, driving a Tesla won’t save the world. Also, at least not yet.

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