Broader markets skidded, with the Nasdaq down 3.85 percent and the Dow Jones industrial average falling 2.65 percent.
Tesla founder Elon Musk, appearing in New York today, said his company could be profitable if it continued to make pricey sports cars, but is instead forgoing income to build a car aimed at mass-market commuters.
"A lot of people were puzzled about why we were going public without profits," Musk, dressed in jeans and an unbuttoned shirt, told reporters outside the Nasdaq building in Times Square, near several Tesla Roadsters.
"The reason we are not profitable today is because we are in the midst of expanding with the Model S," Musk added.
Model S is a luxury electric sedan it plans to launch in 2012 and to sell starting from $57,400.
The IPO was the first by an American car company since Ford Motor Co. in 1956.
Musk, who has staked his personal fortune to Tesla after making almost $300 million selling PayPal Inc. and Zip2 Corp., is using the offering to fund a startup that expects to lose more money in the next two years as it tries to build a battery-powered sedan.
The sale came after at least 35 companies worldwide postponed or withdrew IPOs since the start of May as the European debt crisis sent the Standard & Poor's 500 Index down as much as 14 percent from its 2010 high.
New York-based Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co., along with Deutsche Bank AG of Frankfurt, led Tesla's offering.
Analysts say that the cars may be sleek, but the shares could be clunkers.
The company will go through a fair chunk of 2011 without any products for sale, thanks to tooling changes at a supplier. Production will resume only in 2012 when the mass-market Model S comes online.
But investors are focusing on the opportunity instead of the risks.
Musk told investors recently that his seven-year-old startup is closer to a technology company than a stodgy car maker. He called his car "a freaking technology velociraptor," ready to revolutionize the way Americans buy and drive cars.
Electric-car technology has been supported by U.S. policy makers including President Barack Obama as a way to reduce the nation's oil use and dependence on foreign energy sources. Obama set a goal of getting 1 million plug-in hybrids and electric cars on U.S. roads by 2015 and subsidized Tesla with a $465 million loan from the Department of Energy to develop its cars.
Musk, Tesla's biggest shareholder, co-founded PayPal, the online payment company now owned by EBay Inc., and is CEO of Space Exploration Technologies Inc., a California company that builds spacecraft.
He has spent more than $70 million of his own money on Tesla while selling about 1,000 Roadsters to film stars, musicians and battery-car advocates.
While the automaker has burned through $230.5 million in cash and posted losses in every quarter since it was founded in July 2003, Tesla attracted Toyota Motor Corp., the world's largest automaker, which planned to buy $50 million of shares alongside the IPO.
Tesla and Toyota said they may cooperate on electric- vehicle development, though they haven't signed agreements to do so, filings show. Google Inc.'s founders Larry Page and Sergey Brin, the government of Abu Dhabi and Daimler AG are also investors.
Tesla's net loss in the first quarter almost doubled to $29.5 million from a year earlier. The deficit is more than half the $55.7 million the carmaker lost in all of 2009.
At the original midpoint price of $15, Tesla was valued at 5.5 times its net tangible assets, a measure of shareholder equity that excludes assets that can't be sold in liquidation. That's triple the median 1.82 times for automotive companies globally, data compiled by Bloomberg show.
Tesla will use the IPO and the federal loan to develop its lithium-ion battery-powered Model S, a $57,400 electric sedan intended to travel 160 miles (257 kilometers) per charge, by 2012. The company plans to produce at least 20,000 units of the Model S each year.
Federal loan, divorce
Under terms of the federal loan, Musk and certain affiliates must retain 65 percent of their stock in Tesla for a year after completing the Model S project. Meanwhile, Musk is in the midst of a highly publicized and litigious divorce proceeding. Those proceedings won't result in the combined stake falling below 65 percent or have a material impact on his ability to serve as CEO, according to filings.
As Tesla focuses on creating a niche for premium-priced electric vehicles, Nissan Motor Co. and General Motors Co. are developing battery-powered vehicles to appeal to mainstream buyers.
Nissan's electric Leaf hatchback, which has a range of 100 miles, goes on sale in the U.S. later this year with a base price of $32,780, or a third that of Tesla's Roadster.
GM plans to introduce the Chevrolet Volt electric car in November.
Nissan CEO Carlos Ghosn said the automaker has received more than 20,000 orders for the Leaf globally, and is prepared to build as many as 500,000 electric cars annually by 2012. Japan's third-largest automaker reported revenue of $81.1 billion in its fiscal year ended March 31.
Tesla had revenue of $112 million last year.
Bloomberg, Reuters, and Philip Nussel contributed to this report.