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.
Tesla will have a "very meaningful announcement about a step change in supercharger technology coming later this year," Musk said. That was the angle the company originally had intended to give to The New York Times, he said, then added, "Who knows? Maybe we will ultimately do it with them."
Expanding into Europe and China
Tesla plans to start marketing its cars more in Asia and Europe, Musk said. Currently, it has focused mostly on North America.
A media preview event in Europe last October was "received very, very well," said George Blankenship, Tesla's vice president of sales and ownership experience. "The interesting thing about Europe is we're getting a nice response in reservations, and we don't even have any display cars there yet."
About 25 percent of car reservations are outside North America, he said. Tesla plans to open its first store in China this spring.
New reservations for Teslas hit a new record in the fourth quarter, "driven by holiday traffic to our stores, multiple Car-of-the-Year awards, the start of European marketing, and visibility of customer cars on the road and related word-of-mouth enthusiasm," the company said in a statement.
Tesla added more than 6,000 new reservations from Oct. 1 through Dec. 31, 2012. During the quarter, the company also announced a U.S. price increase for new reservations made after the end of the year. The Model S base price now is $59,900, up from $57,400.
There also were cancellations, however, as the company asked a large number of reservation holders to convert to firm, nonrefundable orders. Net reservations at year's end were more than 15,000, up from about 13,000 in the previous three months.
Company workers put in long hours to meet demand late last year, he said. The average work week in December was 68 hours, Musk said. It has not fallen to 50 hours per week, he added.
The wait time for the cars is about five months, Musk said. But for some, it's even longer. The company has a new red car coming out and it is in high demand, he explained.
"It is an awesome red," Musk said. "We've got a lot of interest in that."
Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500