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Investors still worry over Model S demand/production and ways to keep costs down after the huge fourth quarter loss

Tesla CEO Elon Musk told analysts and reporters that his company expects to be profitable in the first quarter, but that didn't stop investors from sending shares down due to previous Tesla woes.

Not only did Musk say Tesla would turn a profit next quarter, but also mentioned that the automaker would meet demand for 20,000 Model S sedans for 2013. In addition, he showed that revenue grew 500 percent to $306 million and that he had plans to get Tesla's gross margins up to about 25 percent.

You'd think all of this would be music to investors' ears, but shares took a 6 percent tumble in after-hours trading. This was mainly due to the fact that Tesla had a huge fourth quarter loss of $89.9 million (compared to $81.5 million a year earlier) as well as concerns about Model S demand and a lack of understanding how Tesla will keep costs down.

Musk attempted to address investor concerns, saying that Model S reservations increased by 6,000 in the fourth quarter, which is a significant increase from 2,900 in the previous quarter. Also, Musk said Tesla will make 500 Model S' a week and hopes to ship 4,500 cars from the Silicon Valley factory this quarter.


To keep costs down, Tesla plans to get rid of part-time workers and keep full-time workers at 50 hours per week (and adjust only to meet shipping commitments). Also, with production increasing, Musk said suppliers are likely to give more competitive prices.

"We are not demand constrained," Musk said. "We are intentionally production constrained. We're on track to sell every car we make. We could say goodbye to every store and every salesperson (today) and still meet that target."

The Model S was named Automobile Magazine's 2013 Automobile of the Year, but recently had some issues when a journalist from The New York Times took a test drive this winter and reported a horrific venture. More specifically, he said that the Model S doesn't have the range Tesla said it does, and ended up on a flatbed truck at the end of the trip. Musk and the NYT journalist (John Broder) ended up feuding over the matter.

Sources: The Detroit News, Bloomberg BusinessWeek



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By GotThumbs on 2/21/2013 1:55:33 PM , Rating: -1
Tiffany fails to point out in this article, that Musk had factual/graphical data on the NYT's journey and that contradicted the "Reporters" story and that He failed to take take reasonable precautions. There were also inaccuracies in the "Reporters" initial review regarding speeds and charge times.

You don't stop for gas, put 2 gallons in the tank and then expect to drive 75 miles without the risk of running out of gas. One cannot be 100% certain of what is up ahead, such a s traffic jam where you sit in traffic for an hour, etc.

This car is still new technology and anyone not savvy enough to understand (e.g. a NYT Reporter) that it is still developing technology and one should not dive into the black water head first, snap your neck and then blame the black water for your stupidity.

Do your self a favor and read the story from multiple sources, so you can form your own educated opinion.

Best wishes and understand everyone has a bias to some degree.




By Brandon Hill (blog) on 2/21/2013 2:25:19 PM , Rating: 5
Huh? Tiffany did THREE articles on the road trip, including the data points cited by Musk, the original author's reply, AND the reply by a NYT Editor.

http://www.dailytech.com/article.aspx?newsid=29884
http://www.dailytech.com/article.aspx?newsid=29901
http://www.dailytech.com/article.aspx?newsid=29936

All Tiffany did in this article was just give a brief summary of the crapstorm that took place last week.


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