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June 7, 2011 > Tesla prices secondary stock offering at $28.76

Tesla prices secondary stock offering at $28.76

By Tom Krisher, AP Auto Writer

DETROIT (AP), Jun 03 - Electric car upstart Tesla Motors Inc. said Friday that it has priced a secondary public stock offering at $28.76 per share, and it has buyers for all 5.3 million additional shares.

In addition to the shares in the public offering, CEO and co-founder Elon Musk will buy 1.4 million shares in a private sale at the same price. Blackstar Investco LLC, an affiliate of Daimler AG, also will buy 637,475 shares directly from Tesla, the company said in a statement.

The Palo Alto, California, company gave no date to complete the sale, which will raise a total of $211 million to be used mainly to develop a crossover vehicle to expand the company's model lineup.

In addition, Goldman, Sachs & Co., the sale underwriter, has a 30-day option to buy another 795,000 shares, raising another $22.9 million. That would bring the total value of the sale to around $234 million.

News of the pricing, which was set at Thursday's closing price, pushed Tesla shares up $1.68, or 5.8 percent, to $30.44 in morning trading. Tesla shares closed at $26.72 on May 24, the day the second public offering was announced.

Shares have risen dramatically since Tesla's initial public offering a year ago, when the stock sold for $17.

Money from the sale is needed to develop the Model X, an SUV-like vehicle that will broaden the company's appeal among consumers. Tesla gave no details and has not offered pictures of the vehicle, which would boost Tesla's sales with an entry into a fast-growing segment of the U.S. market. The company plans to show a prototype of the Model X by the end of 2011 and start selling it in late 2013.

Tesla currently sells just one vehicle, the $109,000 Roadster, an electric sports car popular with celebrities and performance-car enthusiasts. It will offer a $50,000 four-door luxury sedan called the Model S next year.

Tesla also makes technology, such as battery packs and chargers, for Daimler and Toyota. It is developing the power system for an electric version of the Toyota RAV-4, a popular small crossover vehicle.

The company has posted losses since the IPO as it invests heavily in research and development. It lost $48.9 million in the first quarter largely because of ballooning costs.

But some analysts believe Tesla could eventually become much bigger as demand for electric vehicles expands.

U.S. sales of electric cars will reach 11,000 this year, rise to 36,000 in 2012 and grow to around 96,000 in 2015, predicts research firm J.D. Power and Associates. That's still less than 1 percent of total U.S. vehicle sales.

Analysts do not expect Tesla to turn a profit for at least another two years. Tesla's capital spending also is funded by a $465 million loan from the U.S. Department of Energy to develop alternative fuel vehicles.

Tesla has delivered about 1,650 of its Roadster sports cars as of the beginning of the month and received more than 4,600 reservations for its upcoming Model S sedan.

So far this year, the two automakers offering more mainstream electric vehicles have not seen huge sales. Nissan sold 2,167 of its Leaf all-electric model in the U.S. through May, while General Motors has sold 2,184 Chevrolet Volt electric cars.

Musk, Tesla's CEO, has a history of successful startups, including PayPal and the rocket builder Space Exploration Technologies.

Toyota Motor Corp. last year agreed to sell Tesla a shuttered plant in Fremont, California, and invest $50 million in the company. Tesla plans to use the plant to build the Model S.

Tesla shares closed at $23.89 on its June, 2010 IPO date, hit a low of $14.98 on July 7 and have risen since then. When it held its, Tesla was the first automaker to go public since Ford Motor Co. in 1956.

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