Tesla IPO Showing Investors Willing to Bet on Electric Car Growth

Tesla Model S
Source: Tesla Motors
Tesla Model S

Here's one that should get you naysayer’s of electric cars all charged up.

Tesla, the high-end electric carmaker has expanded the number of shares it will offer when its stock starts trading this week.

The company will now issue 20 % more stock at a price of $14-16 a share.

All part of the Tesla plan to raise about $200 million.

When a company expands the amount of stock in its IPO at a time when public offerings are struggling it's a clear sign there are a lot of investors who buy into the game plan of that company. In Tesla's case, that means a lot of people think the electric car market and Tesla will grow.

Right now electric car skeptics are spitting up their coffee.

The skeptics say America is getting too caught up in the idea of electric cars taking off. After all, electric cars account for less than a half percent of the total global auto sales last year. Fewer than 10,000 were sold. It is a niche market to say the least.

But fans of Tesla and electric cars say we shouldn't focus on what the market lacks now, but rather its growth potential. They point out that by 2015, J.D. Power estimates 300,000 electric vehicles will be sold worldwide. They point that once the infrastructure is developed, more people will feel comfortable driving electric. Finally, they point out that we are just scratching the surface with electric cars and if Tesla is a big player in the growth of that market, its stock should take off.

Personally, I have no doubt the electric car is coming. What I'm not clear on is which automakers will cash in, and which ones will struggle to take full advantage. Is Tesla better positioned than GM with its electric Voltor Nissan with its electric Leaf? Right now it's in a different, more upscale market and there's enough room for it to grow. The real challenge now for investors is figuring out what Tesla can realistically deliver in the near future.

Editor's Note - For a different take, check out CNBC's Herb Greenberg who writes "Tesla IPO a 'High-Speed Crash'?"


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