Print 27 comment(s) - last by mindless1.. on May 13 at 1:10 PM

Elon Musk may have done it again

In Q1 2012 Elon Musk's electric vehicle startup Tesla Motor Comp. (TSLA) accelerated its losses, pouring out $89.9M USD in losses.  That's nearly twice the $48.9M USD it lost a year ago.

I. Model S -- Ahead of Schedule, the Perfect Panacea for Losses

Revenue for the quarter dropped from $49M USD in Q4 2011 to $30.2M USD in Q1 2012.    The drop comes as Tesla stopped its Roadster sales in North American.  Tesla continues to sell limited quantities of ~$100K Roadster electric sportscars in some other regions, and it's still drawing revenue from certain business deals.  But overall, the company's current flows of revenue are drying up.

Much like SpaceX, the other venture of Mr. Musk -- who often draws comparisons to the Marvel Comics character Tony Stark -- Tesla is in the midst of a massive R&D push.  And that push appears to be about to pay off.

Tesla Elon Musk
Tesla Motor Company CEO Elon Musk [Image Source: Michael Kelley]

In the good news department, Tesla announced that it will begin shipping its Model S electric sedan to preorder customers early -- next month.  Priced at $57,400 USD, the sedan will be $49,900 USD after $7,500 USD federal electric vehicle tax credit.  Despite costing half the price of a Roadster, the Model S is expected to offer sporty peformance, thanks to lessons learned from the Roadster experiment.

Tesla was profitable during the Roadster era, but post IPO plunged into debt to develop the new mid-range luxury electric sedan, which is expected to sell in much larger quantities.

2012, Tesla says is a "year of two halves", with next month's Model S launch as the dividing line.  The company has 10,000 preorders for the car and hopes to deliver 5,000 this year.
Tesla Model S [Source: Tesla Motors]

CEO Elon Musk says much of what is remaining is just paperwork.  He comments, "Once we complete and document the tests, we will be able to sell our vehicles in the United States."

The earlier-than-expected ship date for the Model S allowed Tesla to up its annual revenue estimate $10M USD, up to $560M-600M USD.  In other words, Tesla expects to be pulling in over $175M USD per quarter -- almost six times its current revenue.  Stock jumped nearly 10 percent on optimism about the Model S.

Even with extra costs, hopes are high that 2013 will indeed be as profitable as Tesla hopes.

Perhaps in part due to Mr. Musk's veteran leadership, Tesla continues to deliver on risky bids in a market that has seen many of its competitors like Fisker crash and burn.  Thus far Tesla's products have received glowing reviews even as startups and experienced players like General Motors (GM) faced more mixed reception.  Likewise, Tesla was never short on Roadster orders -- only production.  That's a bit different from GM whose Volt sales have reportedly struggled.

II. Future Looks Bright

In the short term, the next step is the Model X -- an electric crossover SUV featuring a slick gull-wing rear-passenger door design.  Tesla has already posted $40M USD in preorders on the model before a price has even been announced.  Production follows a similar model to the Model S, with ten to fifteen thousand units expected to eventually be shipped per year.

Tesla Model X [Source: Automobile Magazine]

Tesla will also be building the powertrain for Mercedes-Benz's EV.

Tesla will also start to profit off its deal with Toyota Motor Corp. (TYO:7203) whose ~$50K USD electric RAV4 SUV will launch later this year, powered by a Tesla powertrain.  Toyota's goal is to ship a modest 2,600 units over the next 3 years.

If Tesla's bid to creep into the mid-range market proves successful, the natural next step would be to take yet another high-risk plunge into the non-luxury EV market.  Don't expect that move to come immediately from Tesla, but it is definitely in the company's long term sights.  

Source: AP

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RE: Correction
By danjw1 on 5/11/2012 12:24:26 AM , Rating: 3
For that, they need to get volume up. It is the low production numbers that keeps the price up. Now when they get their main stream vehicle to the market, they may be able share some parts across all models. That could be enough to get the price down a bit.

RE: Correction
By corduroygt on 5/11/2012 1:10:14 AM , Rating: 3
Batteries are a big part of the price of the vehicle.
The "mass produced" Focus and Leaf don't cost that much less.

RE: Correction
By FITCamaro on 5/11/2012 7:18:28 AM , Rating: 3
Higher volume doesn't bring down the high prices of rare earth metals.

RE: Correction
By rbuszka on 5/12/2012 2:41:30 PM , Rating: 3
Tesla's Roadster uses an inverter and an AC induction motor. There aren't any rare-earth elements in those, only copper windings and copper rotor bars. Permanent magnet DC motors (used in other hybrids and electrics) are marginally more efficient than AC induction motors, but the induction motor and inverter can be delivered more cheaply with modern switching electronics. The price volatility is probably significantly more in the supply of metals for modern battery formulations than in metals for the motors.

RE: Correction
By tayb on 5/11/12, Rating: 0
RE: Correction
By Reclaimer77 on 5/11/12, Rating: -1
RE: Correction
By FITCamaro on 5/11/2012 3:20:53 PM , Rating: 2
Why buy an EV at a huge premium when diesels get such good mileage.

RE: Correction
By rbuszka on 5/12/2012 2:42:53 PM , Rating: 3
The preorders are telling a different story.

RE: Correction
By mindless1 on 5/13/2012 1:10:26 PM , Rating: 2
Not necessarily, those preorders may end up being a quite large % of the entire customer base who'll ever buy one... especially if they turn out to have any serious flaws which first generation designs tend to.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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