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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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RE: My Tesla Roadster experience was a BLAST!
By Iaiken on 11/10/2010 4:07:14 PM , Rating: 2
quote:
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.

quote:
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
quote:
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
quote:
I was on racing compounds.


Well no wonder, that's cheating! lol.

quote:
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
quote:
Well no wonder, that's cheating! lol.


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


"Death Is Very Likely The Single Best Invention Of Life" -- Steve Jobs














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