ELECTRIC CAR: Tesla continues to sell more of its electric cars but it remains to be seen whether the company can sell enough to stay viable.
Image: Flickr/scobleizer
Sales of Tesla Motors Inc.'s electric cars are booming and the company is on its way to profitability, CEO Elon Musk told investors yesterday.
All 20,000 of the Model S sedans that the company plans to make this year will be sold, Musk said during a conference call on the company's fourth-quarter 2012 financial results.
"If we were to close all of our stores right now worldwide, and not have any car specialists or sales people, we would still sell out through the year," Musk said.
But that forecast came as the Palo Alto, Calif.-based company reported a large loss in the last three months of last year. Tesla had a net deficit of $89.9 million in that period, up 10 percent compared with the fourth quarter of 2011, according to documents filed with the Securities and Exchange Commission.
Tesla's stock fell about 6 percent in after-hours trading, The New York Times reported. However, Musk asserted that the company is headed toward operating in the black.
"We really have very high confidence that we will have a profitable first quarter," Musk said. "That's a pretty big deal. It's really an enormous amount of blood, sweat and tears to get there. It's really difficult for me to overstate, but we're going to do it." He added, "I do think we'll be profitable in [quarter] two and subsequent quarters." He stopped short of making an "absolute commitment," however, saying, "I'm just really highly confident that will be the case."
Rapidly growing market niche
Tesla's growth in sales comes as the outlook for many electric vehicles mostly is hopeful, according to Pike Research. That company reported late last year that "the market for plug-in electric vehicles (PEVs) has grown rapidly in the last two years, reaching more than 120,000 unit sales worldwide in 2012."
"While the market has positive momentum, it still faces hurdles," Pike Research added. It predicted "robust growth worldwide for electric vehicles," with hybrid sales increasing at a compound annual growth rate of 6 percent and combined plug-in hybrid and battery electric cars growing at a 39 percent rate between 2012 and 2020.
Tesla's SEC filing and conference call took place during a time when the company has been in the headlines for a tussle with The New York Times over a test drive by a reporter who said that the Model S ran out of juice, stranding him on the highway.
The paper's public editor, Margaret Sullivan, weighed in Monday and criticized reporter John Broder for taking "casual and imprecise notes." Sullivan said that she did not agree -- as Musk has charged -- that Broder faked the result. But "did he use good judgment along the way? Not especially," she said (Greenwire, Feb. 19).
During the call, Musk was not asked specifically about Broder's report or Sullivan's blog but did speak on the car's range.
"For a long-distance trip right now, depending upon where you are in the country, a little bit of extra planning is needed," Musk said. In California and Nevada, he said, there is a "good density of superchargers for long-distance driving, so you don't really need to worry about it."
But on the East Coast, particularly between Washington, D.C., and Boston, more care is needed. There are only two superchargers on that route, he said. More are planned for there, he added, in addition to those that will be installed in Texas, the Seattle area and Chicago.
"Really, we want to get to the point where you don't even have to think about it," Musk said. "We're really close to that point." The cars will soon have software that directs drivers to superchargers, he added.
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12 Comments
Add Comment68 hours? They need to hire more people so they don't have to pay all that overtime!
Reply | Report Abuse | Link to thisAlso, I can kind of see why Tesla would be a little cautious about selling cars in Europe. After the pre-scripted hit-job that Top Gear ran on the Tesla Roadster, they wouldn't want all their top-notch product development and marketing to be sullied again.
Maybe the Chinese can buy up Tesla just like they bought A123 Systems (America's highly subsidized attempt at getting into the high tech battery game).
Reply | Report Abuse | Link to thisFire up the losses!
Reply | Report Abuse | Link to thisBy that I mean money and air quality.
Almost forgot, fire up the coal, too!
Sault, it's not that easy to get quaified workers fast especially when you've already hired a lot of the ones available.
Reply | Report Abuse | Link to thisMusk is doing it right not increasing production until things are sorted out. Remeber he is selling a luxury car andhas to keep quality up and also to keep warranty costs down.
He's met almost every milestone which in itself is amazing and just anounced they'll be profitable this quarter and build, sell 20k EV's next yr as experience grows.
I think he might be the only sucessful car start-up in the US in 5? decades and I think he'll make a fortune as he's saying making a 25% margin late next yr.
My guess is that the Chinese are buying the companies to acquire the underlying technology, not to make electric cars.
Reply | Report Abuse | Link to thisSault
Reply | Report Abuse | Link to thisGood products sell and bad products are avoided by consumers. If electric cars were good today, we would all be buying them.
The delusion continues. BMWs are good cars, but not everybody buys them. Priuses (Prii? Prius?...like the plural of moose?) are good cars, but not everybody buys them. The Model S is a good car, but their ENTIRE production run for 2013 is already sold out...and they START at $50k. Not everybody can afford that price point. In addition, EVs are not a good fit for people that do a lot of long-distance driving right now. Maybe when there are more superchargers available along the highways, EVERYBODY will be buying them. Finally, you don't see a lot of EVs sitting on dealer lots for extended periods of time. The car companies can't even make enough of them for EVERYBODY to have one. So really, your statement doesn't make sense on several levels.
Reply | Report Abuse | Link to thisYou have a !LOT! to learn about marketing. People buy garbage items or services all the time. Frequently the superior product fails but the "good enough" lower quality alternative takes over. People even buy stuff that they know has a high likelihood of killing them.
Reply | Report Abuse | Link to thisTesla is a great product. But needs savvy marketing and mass media hype. How many people know Tesla is quicker than the 660 hp Mercedes SL65? Or that it can beat the iconic Lamborghini Countach in a quarter-mile drag race? It is also quicker than some models of Ferrari, Porsche, Corvette and Viper.
Reply | Report Abuse | Link to thisCongratulations, but TESLA, needs to develop the OCCCE (oxyhydrogen closed cycle combustion engine) with fuel tank to 200 bar, and regenerative braking by electrolysis.
Reply | Report Abuse | Link to thisThis too, has no emissions, and the same concept can be considered for fuel cell use.
With enough clean energy on the grid, as Oceanogenic Power from Panama, we can electrolyze oxyhydrogen, enough, at home or in the office.
Of course. Car industry economics are based based on Millions of Units sold. Not dozens.
Reply | Report Abuse | Link to thisWe'll mourn when they finally run out of Musk Money.
I'd buy a tesla if I had the money... and were shorter, (I heard Arnold Schwartzenegger bought one to help skyn... boasting silicon valley economy, and then discretely tried to give it back because he didn't fit inside it, I am tall, so that might be also a problem)
Reply | Report Abuse | Link to thison the other hand, "el cheapo" electric cars like those from china are ok for short distances, but aren't fun to drive...