Tesla Motors To Be Profitable Selling Electric Cars By April …

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Tesla Motors Electric Cars

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That would be the that Tesla Motors will operate at a profit in the quarter, which ends 31.

We expect to be slightly profitable only non-cash option and expenses) in Q1 2013, it wrote in a to shareholders on its financial results after the stock market yesterday afternoon.

The prediction by almost a whole year the timeline for profitability, which had been set for the fourth quarter of

The company lost $90 million in the on revenue of $306.3 million. Its per share were $0.65. And it another $12.7 million of its million low-interest loan the U.S.

Department of Energy.

said it built 2,750 and delivered 2,400 to customers October 1 through December 31; it to deliver about 4,500 in the quarter.

The company’s stock, had opened the day at $39.30, closed slightly at $38.54 before the were released.

[ UPDATE . after the market opened morning, Tesla shares below $35—tripping a so-called breaker designed to slow sales of falling stocks.]

releasing the numbers, Tesla held a conference call in CEO Elon Musk, CEO Deepak and George Blankenship, vice of sales and ownership experience, to questions from industry and offered additional color on issues.

‘Cautiously optimistic’

summarized the company’s achievements and this year as follows.

We to do three things: We said we start production in July (it was June), deliver 20,000 in 2013, and by the end of 2013, we will 25 percent gross margin—not regulatory credits, Musk

He said at the end of the call that he commit to being profitable in all this year until he more about how the company’s deliveries, and sales rolled out the first half of the year.

Maybe I’m hedging too but I don’t want to be overconfident, the usually quite confident

In the absence of some force event—a giant earthquake, for confident that we will be this quarter, and it’s our to be profitable in subsequent quarters as

I do think we’ll be profitable in the quarter, and subsequent quarters I’m cautiously optimistic that.

The following points other topics discussed on the

Reservations and waiting time

The said it added 6,000 reservations for the Model S (and Model X) during the fourth compared to 2,900 added the quarter.

Asked about that it was possible to get certain S configurations through a Tesla in about a month, Musk that the average wait for a car is now about five months.

he said, certain high-end S configurations—the 85-kilowatt-hour battery with air suspension, not in the new red paint—were in six to eight weeks.

If we were to all of our stores worldwide right he said, We would still out for the entire year.

And, he early deliveries have of more lavishly specified than the company had projected.

than half of Model S have specified the 85-kilowatt-hour pack, and less than 10 are for the 40-kWh version—though, he acknowledged, could change in the future.

into Europe and Asia

North America, the company has a limited amount of marketing in now, Musk said, it has two cars there. And it has done nothing in Asia.

That change dramatically this Musk said.

Reservations are rolling in steadily Europe, Blankenship said, not having cars to display and just clearing out the last Roadsters. Asia is even advanced.

About 25 percent of the reservations now come from North America, according to and that will increase. The American stores saw 1.6 million he said.

We’ve said it Musk noted, but we expect ultimately, we will deliver to 15,000 cars in North 10,000 in Europe, and 10,000 to in Asia—but that will time to build up, especially

The export drive doesn’t us this year all that Musk noted. I’m sure we can deliver more 20,000 cars this but we want to make sure laid the groundwork for improvements 20K for 2014.

It’s not really a of demand generation for this he concluded. The question is more, How to that next year?

One caught CEO Musk off-guard: were the stats on the number of S cars required post-production up or rectification of other quality-control

I don’t have that said an obviously surprised I wasn’t expecting that

The percentage, he said, has dropped since the start of production June. Cars that to be pulled off the end of the line to have fixed are now a fairly small

And, he pointed out, any related to the cars’ software can be by deploying over-the-air software no other carmaker can do. That, he has worked quite well.

and waiting times

In its shareholder Tesla wrote:

After and cancellations, our net reservations at year were over 15,000, up about 13,000 at the end of Q3. New reservations at a steady, although slower in Q1 2013, as compared to December, due in to the pull ahead of reservations Q4 by customers seeking to avoid the increase.

Q1 cancellations are likely to remain as the remaining older reservation are invited to configure their within a set timeframe or pay the higher just like new reservation

Asked by an analyst whether the net number would fall the first two quarters as deliveries up, Musk indicated that it well do so.

In raising the price of the S and asking reservation holders to their orders if they the old price, Musk said, we trying to clean out anyone who serious about buying the

Tesla expects its reservation to stabilize, he said, though it has a lot of in North America—more than its production target of 20,000 a year.

Our intention is not to have wait six months for a car, he We much prefer that generation and production are better so customers can order a car, get it in a few

It’s not our intent to have a waiting list, he said. pretty inconvenient for people.


But, he said, the production numbers have constrained solely by its ability to ‘steady-state production in an efficient by demand—which he called a really point.

If we wanted to, we could production to 500 units a week, boasted, but it would have a lot of for overtime and so on.

It’s far more for Tesla Motors to improve the of the assembly process at the current of 400 cars a week, he said.

is our very first quarter we’re at our target production Musk said, which has been very little to work on production efficiencies.

Those efficiencies include the number of staff hours per car and cutting the number of temporary at the Fremont, California plant.

workers averaged almost 70 a week in December, which noted cost the company a deal of money. It’s time above 40 hours a he said, but it’s double above 60 hours.

Today, average almost a 50-hour and Tesla’s goal is to drive down to the mid-40s during

The labor hours per car are dropping Musk said, saying may be the single biggest factor in the drive to Q1 profitability.

Tires the Czech Republic

Close cutting staff hours per car are in logistics, and efficiencies in the parts suppliers for the Model S.

We had to fly in a lot of parts in Musk said ruefully, at a up to 10 times the standard price. We had to do things like fly in tires the Czech Republic.

Tesla Motors Electric Cars

Tesla had to fly in the tires from Europe it took longer than 30 for the tires to arrive from the required payment in 30 days.

The unwilling to pay for goods it hadn’t yet, held its payments the tires arrived—which caused the maker to cancel its credit Mayhem ensued.

Once the got sorted out, the halt in sea meant Tesla had to pay to fly in the tires to its production lines rolling.

I to punch myself in the face for one, Musk said.

an analyst

And he had specially harsh for one industry analyst, IHS Automotive, had projected that Tesla build 1,500 cars a the 20,000 it projected and is now working

With Tesla an unknown to the auto industry’s parts those companies tended to more on third-party estimates on the volumes of their parts had actually ordered.

Suppliers looked at that and tooled up for some puny of parts, Musk said, and caught flatfooted when we ‘No, we really did mean the we sent you’.

Tesla had a number of conversations with where they realized we weren’t kidding about

Now, Musk said, are more ready to believe the company’s production goals are price breaks for higher of parts are kicking in as well.

includes the price of the lithium-ion for its battery packs, supplied by (which also owns of Tesla Motors).

The cost of its will fall this Musk said, which have a beneficial effect on for all Model S variants.


While Tesla already has a partner—Athlon—lined up for its European customers, in America, all deliveries are now outright

Leasing is something the company to offer, Musk said, and it arrive in the second half of year. Tesla wants to sure the terms of the lease are and talks with financial are progressing in a good direction.

banks, he noted wryly, to like the notion that will be profitable in Q1—it them greater confidence the startup carmaker is a company would want to partner

Next year, Musk leasing will be a big factor for In Europe, it will be at least a factor this year.

announcement coming

Musk briefly to the existence of the controversial in The New York Times, in which a S ended up on the back of a flatbed

He acknowledged that in colder the SuperChargers should be more spaced—120 to 150 miles apart, rather than the current separation between SuperCharger in Delaware and Connecticut.

The company is deploying more SuperCharger he said, including in Texas, the area, and other East locations.

And he hinted at future to the SuperCharger system. We’ve got a meaningful announcement about a change in SuperCharger technology later this year, he

That had originally been the company wanted to have the New Times review cover—so, said, Who knows? Tesla invite the Times to do another later in the year.

Acknowledging work

During the call, paid tribute to the hard of the entire Tesla Motors

The results being reported he said, are due to an enormous amount of work by a really dedicated of people. We’re going to be which is a pretty big deal, but it an enormous amount of blood, and tears to get there.

It’s for me to overstate the level of difficulty, he but we’re going to do it. I’m proud of that—and we can say that confidence.


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(c) 2013, Gear Media.

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