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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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By Beenthere on 11/10/2010 2:56:49 PM , Rating: 0
I'll bet the execs at Tesla are being paid well... with my tax dollars. Bama boy didn't send me no bailout check or EV development financial incentives. Bama boy sent me the bill to pay for this crap.




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
quote:
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.


"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins














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