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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 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...


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