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Tesla CEO Elon Musk says his company isn't worried about quarterly profitability. The Starkish playboy, who also founded SpaceX, recently rode away with millions in cash after selling part of his stock in Tesla's IPO.   (Source: Michael Graham Richard)

Tesla hopes to return to profitability in 2012 when it rolls out its new Model S EV.  (Source: Autoblog)
Company says it doesn't care about quarterly profitability

Tesla is sort of like hip-hop superstar of the auto world -- it's blowing through money like it could be dead tomorrow.  

The company had plenty of promising news so far this year.  In May it announced that Toyota invested in it and contracting it to help produce Toyota's upcoming electric RAV4 crossover SUV.  The company also secured $226M USD in cash from a initial public offering of stock.

However, according to its latest earnings report it bled out $103M USD in only its first 3 quarters to date.  Its latest loss -- for Q3 2010 -- was at $34.9M USD.  That's disappointing considering that in Q3 2009 the company only lost only $4.6M USD, and was profitable for the first two quarters of 2009.

Company founder and chief executive Elon Musk received the news of the big loss casually, commenting to the 
San Jose Mercury News, "Attaining quarterly profitability isn’t a goal… We’re very focused on long-term profitability."

Mr. Musk who pocketed a tidy sum of cash during the stock offering, says that with Toyota's support, too, the losses are less of a concern, writing in the earnings report:

We are very pleased to report steady top-line growth and significant growth in gross margin, driven by the continued improvement in Roadster orders and our growing powertrain business. Roadster orders in this quarter hit a new high since the third quarter of 2008, having increased over 15% from last quarter. While some of this is due to seasonal effects associated with selling a convertible during the summer months, we are pleased with the global expansion of the Roadster business and the continued validation of Tesla’s technology leadership position evidenced by our new and expanding strategic relationships.

So if Roadster orders are increasing, why is Tesla losing so much money?  The answer lies in its entry-level luxury electric vehicle, the Model S, which it wants to roll out.  Tesla hopes to sell the car for around $40K USD, after tax credit.  However, cutting its production costs in half is no easy chore -- particularly when Tesla hopes to complete the vehicle in just over one more year, beginning assembly in early 2012.

Tesla also has the advantage of strong support from the Obama administration and the U.S. government.  President Obama recently urged Republicans in Congress to back EV funding.

Those factors have led investors to be generally optimistic, and share prices currently are at above $24/share, over a 40 percent gain over the IPO price of $17/share.

The critical test for Tesla, though, will come in 2012 -- the same year that the Roadster will cease production.  If it can't deliver sufficient quantities of the 2013 Tesla Model S, or if it faces delays that could spell disaster for the newly public automaker.  And even if it can 
produce the vehicle, it faces the further test of whether the relative "masses" of entry luxury buyers really desire an electric vehicle from a relatively green automaker.  Tesla and Mr. Musk believe (or at least say they believe) that the Model S will sell very well -- and they better hope so, as the company's success depends on it.

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My Tesla Roadster experience was a BLAST!
By Iaiken on 11/10/2010 2:11:36 PM , Rating: 2
While I didn't get to live with the car, I got to take a 2.0 version in jet black out on Leguna Seca back in April and it was a totally different kind of automotive experience than anything I have had before.

It was like driving a sexier, more refined version of the future. The car was nimble, powerful, quick, responsive and forgiving. With the top on and the windows up, the silence made me feel like I was driving a high-speed ninja.

While the car is far from perfect, my only criticisms would have to be the disconnect I experienced in the silence (once the novelty had worn off) and the low top speed.

It just feels unnatural to be doing 100mph and climbing to the accompaniment of nothing more than the sound of the tires on the road and the air rushing by.

The low top speed is weird because you get up to the 120mph mark so quickly (~9 sec) and then suddenly the fun is pretty much over and you have 1/2 a straightaway to go. My '06 JCW can put the needle off the end of the speedo(which stops at 150mph) on the back straight of Mosport.

I guess what I am saying is that it's kind of a mixed bag. The car is great for public roads and the twisties, but leaves a lot to be desired when it has room to run flat out.

RE: My Tesla Roadster experience was a BLAST!
By Reclaimer77 on 11/10/2010 2:37:37 PM , Rating: 2
Really? That's not the experience most people paid to wring cars out seem to share. The Tesla is disjointed, disassociated, and all together disinterested. The batteries alone weight half a ton, and all that localized dead weight makes the Tesla transition like a car 3 times it's size. Couple that with tires made for reduced rolling resistance and not lateral grip, and this thing slides all over the place.

RE: My Tesla Roadster experience was a BLAST!
By Pirks on 11/10/10, Rating: -1
RE: My Tesla Roadster experience was a BLAST!
By Reclaimer77 on 11/10/10, Rating: 0
RE: My Tesla Roadster experience was a BLAST!
By Iaiken on 11/10/2010 4:07:14 PM , Rating: 2
Couple that with tires made for reduced rolling resistance and not lateral grip, and this thing slides all over the place.

I was on racing compounds.

That's not the experience most people paid to wring cars out seem to share.

Well Reclaimer, I guess that depends on if you are a purist/aficionado, or just a guy who likes cars. I've driven my CTO's Ferrari 360 Modena and some friends and I rented a trio of supercars (Gallardo, GT3 and a Viper) from GTA exotics for a friends bachelor/going-away party back in 2008. Don't let me be mistaken, it has very little in common with any of those cars.

The car is certainly in control of what you are doing, inputs are all essentially taken care of by the car and applied to the drive. Try to hoon it and the computer steps in, start loosing traction in an turn and the computer steps in. I can understand how this could drive a purist crazy, but I'm a huge nerd and flying through the corkscrew in a lotus-bodied electric car made my day.

Other peoples experiences may be very different from mine, but for me, it was a fun day in the sun and I liked it.

ps: Nothing makes you behave yourself in a Lambo quite like a $7000 deposit.

By Spuke on 11/10/2010 6:21:58 PM , Rating: 3
Other peoples experiences may be very different from mine, but for me, it was a fun day in the sun and I liked it.
A day at the track is always a good time! Glad you enjoyed yourself.

RE: My Tesla Roadster experience was a BLAST!
By Reclaimer77 on 11/10/2010 6:51:40 PM , Rating: 2
I was on racing compounds.

Well no wonder, that's cheating! lol.

Don't let me be mistaken, it has very little in common with any of those cars.

Ok that's cool, for a minute there I was getting worried.

So Top Gear only got like 40 miles out of the Tesla in hard track use before the batteries died. So they got in another different Roadster and THAT one's electric motor quickly overheated and died after only a few laps. How did you guys fare?

By Iaiken on 11/10/2010 7:12:27 PM , Rating: 2
Well no wonder, that's cheating! lol.

It's not whether you win or lose, cheat to win.

RE: My Tesla Roadster experience was a BLAST!
By yomamafor1 on 11/11/2010 10:24:58 AM , Rating: 2
Yes, because technology improves through constant bashing of new technology. That is similar to bashing the original ICE vehicles for being slower than the horses they were poised to replace.

Commercial electric car technology is still in its infancy. It wasn't until recently Lithion Ion battery became much cheaper and lighter for consumer use. Give it a few years, then it will outperform the ICE it is poised to replace.

By Reclaimer77 on 11/11/2010 6:48:45 PM , Rating: 2
Again, there is no "new technology" in the Tesla. They took the electric car, which already existed, crammed 2,000 laptop batteries and wrapped it in a roaster body. Hell the body isn't even unique, it's from a Lotus.

And let me be perfectly clear about this, and I know a lot of people don't want to hear this. But electric cars will never, EVER, be on par with ICE vehicles. A "few years"? Define few please. When there is an electric car that can go 300 miles on a charge, and charge in minutes not hours, call me up. Oh nevermind, because I'll be dead before that happens. THAT'S how far behind ICE we're talking here, and it will NEVER catch up.

We see how electric cars plan to "compete". Get increasingly large government handouts, while at the same time ICE manufacturers are slammed with increasing regulation, absurd economy standards, and other such Government interference. That's NOT competing, my friend, that's called cheating.

RE: My Tesla Roadster experience was a BLAST!
By ChuckDriver on 11/10/2010 3:02:16 PM , Rating: 2
My '06 JCW can put the needle off the end of the speedo(which stops at 150mph) on the back straight of Mosport.

Can you describe the feeling of doing 150 MPH in a Mini Cooper? I'm more curious about that than the Tesla.

By Iaiken on 11/10/2010 3:42:53 PM , Rating: 2
I've only done it over at Mosport because Watkins Glen uses a pace car (last time it was a truck) to limit everyone to 120mph.

The car is well-built, firm suspension with a low ride, the aero kit and spoiler actually start to work and you feel firmly planted on the road and in control.

It's strangely more comfortable than one might think, though once you get over 140 even the five car widths of the Mario Andretti straightaway starts to feel awfully narrow. There are some minor annoyances, cabin trim starts to rattle and the wind noise is obnoxiously loud (it's not exactly a slippy shaped car).

I'm pretty sure that for how long I had the needle off the speedo and that the revs were still climbing to red-line, I must have been in the neighborhood of 160mph. Then before I knew it, you're bringing it down to 60 for the exit turn and you're glad those massive 12.4" 4-piston Brembo's are there to stop you.

ps: If you own an '07-'9 Cooper S or JCW and you plan to lap it, get your software updated because there is a bug in the older ECU where it stops calculating fuel consumption over 200kph. One of my friends found out the hard way when he ran out of gas on Watkins and the indicator read that he was still 1/4 full.

By theapparition on 11/10/2010 3:27:58 PM , Rating: 1
Top speed is definately an issue, as well as driving more than a few laps, as the car quickly runs out of juice at that speed.

RE: My Tesla Roadster experience was a BLAST!
By Runiteshark on 11/11/2010 2:53:52 AM , Rating: 2
Here's a question, have you driven the Exige s240 at all?

I drove the Tesla 2.0 as well and well.. Honestly laughed. It's great and all in straight line acceleration just as you claim but I felt like the cornering was absolutely terrible in comparison to its original Lotus sister. You can defiantly feel the extra weight of the batteries in the tight corners the most, where I felt like it rolled far too much.

If they come with a way to shrink batteries by 80% I think that the tesla would be a real hit, but as I'm sure we'd both agree, that's not going to happen any time soon. For the time being I'll stick to ICE's for now.

By Iaiken on 11/11/2010 9:44:39 AM , Rating: 2
Here's a question, have you driven the Exige s240 at all?

Never had that pleasure, no.

By FITCamaro on 11/11/2010 9:27:33 AM , Rating: 2
So what'd it last? 2 laps? 3?

By Ammohunt on 11/11/2010 4:58:51 PM , Rating: 2
I have driven an Audi A4 1.9 TDI Station wagon at 149MPH on the autobahn in southern Germany loaded with 4 people + luggage at less than 5k on the tach. I wouldn't trade a tesla for a car like that. Diesel is the future.

By Motley on 11/10/2010 4:02:26 PM , Rating: 2
Of course it's shortsighted people like you who when the oil either dries up, the arab nations get pissed at us and the price of gas goes up to $30 a gallon, you'll be the first in line asking why the government didn't see this coming and do something about it.

By Cerin218 on 11/10/2010 4:25:46 PM , Rating: 5
So when are we going to get the power infrastructure that will allow all of us to drive a car that gets at best 40-80 miles on a charge? Will it be fun to make a 600 mile trip that will cause you to have to stop and charge your car 10 times? Will your employer let you recharge at work? Oil is going to be around for a long time. You people keep whining about it running out when I have yet to see that. It's great that someone is looking for alternatives, but there isn't ANY three sources combined that could replace the easy of use, portability, or energy potential of oil. Period. Battery technology simply ISN'T there to make a feasible EV vehicle. When 10-15K of the cost of you are is the battery, and you don't even own it, you rent it, that is not economically feasible. 40K after gov credit? Funny that the Department of Energy was created to get us off of oil and all they have managed to do in 30 years is waste money. But Big Brother gov will save us right?

By mcnabney on 11/10/2010 5:17:40 PM , Rating: 1
I kind of envisioned quick-charging stations at every McDonalds. Drive four hours, stop for 45 minutes to refill your stomach and car.

Most charging would always be done overnight. We have plenty of excess capacity then.

Also, the downward crawl from peak global oil production will take a hundred years or more, the benefit from detaching ourselves from the oil market is the freedom it gives the country. The freedom to not send a few hundred billion of our accumulated wealth overseas (or over the border) every year. The freedom to tell the Middle East to F-Off.

By Spuke on 11/10/2010 6:38:13 PM , Rating: 3
Most charging would always be done overnight. We have plenty of excess capacity then.
Until everyone starts recharging at night. LOL!

By kmmatney on 11/10/2010 6:41:32 PM , Rating: 4
I think the people who buy electric cars are more the Starbucks type, rather than the McDonalds type...

By Cerin218 on 11/10/2010 4:28:52 PM , Rating: 2
We don't have electric cars because the market forces in this country have decided that we don't need an electric car. If there was demand for it, then you would see people producing it. It's a fad now like it always has been. Same reason that the hybrids haven't killed the conventional engine.

By False Profit on 11/10/2010 5:51:42 PM , Rating: 2
It has more to do with technology than market forces, if computers today cost what they did in the 60's and weren't much more effective, no one would want nor own one. The same's true with electric cars. When the technology is there, someone will want to make money off of it... even if it isn't the traditional auto makers. Tesla's just the earliest attempt.

I suspect Tesla will pave the way for electric cars in a decade or two, but whether they survive or become blocks for others to step on is yet to be seen

By priusone on 11/10/2010 11:31:49 PM , Rating: 3
Shortsighted people who want to drill in Alaska and put oil rigs along Oregon and Washington. Nah, let's sit out latte's and keep feeding money to the middle east. And while we are doing that, let's not tap our tremendous mineral wealth and instead buy our rare earth material from China. And while we are at it, let's just let the forests burn, which releases and incredable amount of carbo into the atmosphere instead of putting tens of thousands of Americans to work logging. Yup, we sure are short sighted.

On another note, it would be interesting to see train and airline companies team up to ship your vehicle and then fly you to certain locations, so you can have your rig for vacation.

By FITCamaro on 11/11/2010 9:34:25 AM , Rating: 2
No it'll be people like me who say "I told you so" when talking about developing our own energy reserves. As well as our own mining.

You idiots all push for electric cars even though we don't have any real mining going on to provide the materials to build them. We have lots of oil. We're not using it. We don't have lots of lithium and other rare materials for building batteries. But you don't seem to mind this. Somehow buying 20% of our oil from Arab nations is bad but buying nearly 100% of our batteries/materials to make batteries from China is good?

And completely left out of the equation is developing real bio-fuels. That gets a few stray million opposed to the billions allocated for electric vehicle development.

By tng on 11/11/2010 10:00:01 AM , Rating: 2
I agree here. The real tragedy is that most Americans believe that the US has no oil reserves left. Wrong, oil companies just figured out that it is cheaper to import and refine Middle East oil than to refine oil from almost anywhere here in the US (mainly because of the sulfur content of the oil itself).

Face it, the politicians in DC will put money into anything that makes them feel good about themselves, while not paying any attention to what would really help because it is not popular. They have become extensions of Hollywood.

Not one of them wants to clear all of the EPA hurdles that a business would have to leap for a new refinery to be built, new oil wells to be tapped or new mines to be opened for rare earth minerals. Doing so would mean that they would be criticized by a small percentage of people out there who are very vocal, even though it would help the country as a whole.

By FITCamaro on 11/11/2010 12:45:48 PM , Rating: 2
Its not even that the companies realized its cheaper elsewhere. It's that they're not allowed to do it here. Millions of acres of land have been banned by the government for oil and gas exploration. Notably the tar sands in the midwest.

It's also all but impossible to build a refinery in the US. Oil companies would love to refine more oil here but they can't. So instead they have to build refineries elsewhere and then import refined fuels which is far more expensive. Which drives up the cost of energy in the US.

And why WOULD you care?
By Reclaimer77 on 11/10/10, Rating: 0
RE: And why WOULD you care?
By rickon66 on 11/10/2010 7:35:31 PM , Rating: 2
$465,000,000 of taxpayers money down the toilet so far and the fatcats at Tesla party on!

RE: And why WOULD you care?
By roykahn on 11/10/2010 10:05:49 PM , Rating: 2
Would you also complain about US taxpayers bailing out the large financial institutions? How about the large car manufacturers? Do you also care about the money that goes to weapons manufacturers and military operations? Wasn't there about a billion dollars for military spending that was unaccounted for not so long ago? How about the large US agribusinesses like cotton farmers who get massive subsidies?

The majority of the American population is getting screwed more and more over time. Money from the working class via taxes is going to the ruling class and there's little complaint due to the brainwashing conducted by the media, government, and corporations. Expect this trend to continue because the public is very ill-informed while the puppet masters are getting better at lies and deceit.

RE: And why WOULD you care?
By Reclaimer77 on 11/10/2010 10:36:00 PM , Rating: 2
Would you also complain about US taxpayers bailing out the large financial institutions? How about the large car manufacturers?

I don't know about him, but yes, yes I do. Often. Your point?

RE: And why WOULD you care?
By roykahn on 11/11/2010 4:09:47 AM , Rating: 2
My point could be that it's not necessarily a bad thing for governments to offer incentives for certain things. What matters is who benefits from government programs. If you want to complain about stuff, then complain about US agribusiness subsidies that drive out foreign farmers from their own country's market which leads to all sorts of problems. Complain about the absurd amount of US military spending.

I don't believe that the government's plan to develop electric cars is such a bad thing provided that the electricity is produced in a better way than we produce oil. Compare the effect of that plan to the other ways taxpayer money is being spent. Of course, just like any assistance program, there will be those that try to milk the system. But that can happen with and without government involvement.

RE: And why WOULD you care?
By tng on 11/11/2010 9:48:47 AM , Rating: 2
I grew up in a small farming community and can say that Ag subsidies can be good and bad. I have seen family farms saved by them in bad years, but I have also seen some who take advantage of the system.

As for military spending, again there is good and bad. There are allot of good things that have trickled down from military projects that benefit us, but there are many large corporations that also milk the system. Frankly even those corporations employ people who help the economy, so there is some good there.

Not everything is black and white.

RE: And why WOULD you care?
By roykahn on 11/11/2010 2:26:47 PM , Rating: 2
I wasn't just referring to the economic impact as being bad, I was trying to point out the effect of those two things you mentioned. One being the destruction of foreign farmer's lives and the impact on their society and another being the many deaths caused by the US military and/or its weapons and training.

In these two cases, I think it's safe to say the bad far outweighs the good.

RE: And why WOULD you care?
By Reclaimer77 on 11/11/2010 6:42:57 PM , Rating: 2
My point could be that it's not necessarily a bad thing for governments to offer incentives for certain things.

Ummm handing a company a pile of taxpayer money for a product that maybe, MAYBE, 1% of the country would be interested in isn't an "incentive". Especially in the middle of a terrible recession. And I fail to see how an overpriced electric roadster can be classified as a national benefit and something the Federal Government needs to be interested in.

Complain about the absurd amount of US military spending.

Why should I when Liberals do such a better job of that than I could?

RE: And why WOULD you care?
By roykahn on 11/11/2010 9:54:09 PM , Rating: 2
Correct me if I'm wrong, but isn't the government assistance program for the development of cars that can use alternative fuel sources? You're making it seem like Tesla are the only ones getting assistance. One of the benefits, as I'm sure you know, is lower reliance on oil and the terrible foreign policies that result from that dependence.

I'm not sure I understand your comment about Liberals. Most of the public should be against the huge military budget regardless of their political beliefs. Anyway, how can you want lower taxes while accepting the massive amounts of money being spent on the military?

RE: And why WOULD you care?
By ekv on 11/11/2010 4:06:17 AM , Rating: 2
Would you also complain ...

Stop spending.

high price of admission
By Mitch101 on 11/10/2010 1:26:46 PM , Rating: 2
I would imagine that is just the cost of admission. What they are accomplishing isn't cheap and if they pull it off, which I think they will, they should do well or be bought out entirely down the road.

RE: high price of admission
By Smartless on 11/10/2010 1:42:43 PM , Rating: 2
True, leading the industry in high performance EV isn't cheap but one can only hope that CEO's who sell stock in their own company aren't telling us something. Remember the good ol' days when people put their heart, soul, pride, etc. in to their company? Either way, if Tesla falls I hope they've contributed enough worthwhile advancements before they take our money and run.

RE: high price of admission
By kattanna on 11/10/2010 2:21:23 PM , Rating: 2
since he is also the founder of spacex which is a leading contender to be making rockets for NASA, im doubting he is going to "up and run" anywhere.

RE: high price of admission
By MozeeToby on 11/10/2010 1:49:42 PM , Rating: 4
Why do we keep getting this "Tesla lost X million dollars this quarter" articles. They've stopped production of the Roadster, they have no significant income until they get the Model S into production. They knew they were going to be losing money in the meantime, this is completely, 100% in line with their business plans. That is why they wanted a large loan a year ago, so that they could end production of the Roadster and focus on bring the Model S to market as quickly as possible.

RE: high price of admission
By CU on 11/10/2010 2:29:05 PM , Rating: 3
Plus their stock went up from this news, because it was better than expected. It is at 27.66 right now up 12.3% today.

Making a profit is so overrated.
By hondaman on 11/10/2010 2:09:03 PM , Rating: 2
Who cares about profitability when BHO can just give you more free money, amirite?

RE: Making a profit is so overrated.
By wookie1 on 11/10/2010 2:47:18 PM , Rating: 2
Exactly. Why should they care about losing money? It's not like it's their money in the first place. Everyone still gets fat paychecks, so party on! They probably figure that uncle sam will send some more money even if they run out.

Not surprised.
By CharonPDX on 11/10/2010 2:01:50 PM , Rating: 2
They're spinning up a brand new manufacturing facility - I'm sure the deal to acquire it wasn't cheap, the equipment to configure it for their product isn't cheap, the cost of hiring people isn't cheap.

The real question of their ability to be profitable isn't during the ramp-up to production, it isn't even the first quarter or two of production, it's the year after that. Once they have settled into the groove of production, with longer-term demand settled, we find out how profitable it is.

My great-great-uncle's car company wasn't profitable the first two years, either. It was very profitable when he retired and sold it to his business parter, who later sold it to Walter P. Chrysler; who then renamed the company after himself.

"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton

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