Tesla to be Profitable in Q1, Investors Send Shares Down
February 21, 2013 1:24 PM
comment(s) - last by
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
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.
The Detroit News
This article is over a month old, voting and posting comments is disabled
Chinese method to reduce cost
2/21/2013 2:39:56 PM
So in reality Tesla is reducing labor costs by forcing all full time employees to work 50 hour weeks effectively reducing the cost per labor hour by 25%. They also got rid of the part time works since if you increased their hours Tesla would have to provide health care for them or pay the Obamacare fine for not providing health plans for these part time workers who probably will go over the 30 hour limit.
Cheap labor is the key.
RE: Chinese method to reduce cost
2/21/2013 5:57:20 PM
The sobering reality is that their factory really doesn't need that many humans at all. It's one of the most heavily automated factories in the world.
It's called overtime...some people actually like to work overtime because you can make an insane amount of extra money. They weren't working 50 hour weeks, they were working 68 hour weeks. No pain, no gain.
Every business in the world does the part time worker thing...God forbid everyone got healthcare.
RE: Chinese method to reduce cost
2/24/2013 8:12:10 PM
Nothing than any other car plant in the country does. My cousin worked for Ford building Rangers and Explorers and there they worked 5 ten hour days and as much as they could on Saturday and sometimes Sunday. 58 hour weeks were not out of the normal at all.
"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov
Checkmate: Tesla's Elon Musk Provides Driving Logs from NYT's "Peculiar" Model S Trip
February 14, 2013, 12:41 PM
NYT Reports Poor Tesla Model S Range in East Coast Trip; Elon Musk Fights Back with Driving Log
February 12, 2013, 1:00 PM
Tesla Model S: Automobile Mag's 2013 Automobile of the Year
November 2, 2012, 2:14 PM
Tesla to Begin Shipping Model S June 22
May 23, 2012, 11:16 AM
Tesla Motors Says Model S '12 Production Run Sold Out, Will be Profitable in '13
October 28, 2011, 6:52 PM
Ford Expects Four-Cylinder Engines to Significantly Increase in Popularity
May 21, 2013, 8:56 AM
Toyota Wants to Increase Lithium-Ion Battery Production to 20,000/Year
May 20, 2013, 9:30 PM
Mercedes Aims for 45 MPG Highway on New E250 Bluetec 4Matic Diesel Sedan
May 20, 2013, 8:20 AM
Tesla to Issue More Stock, Pay Off Energy Loans with Proceeds
May 16, 2013, 1:58 PM
NC Becomes Latest State to Threaten Tesla's Direct Sales to Customers
May 14, 2013, 11:33 AM
Consumer Study Shows Buyers Are Embracing Fuel Sipping Vehicles
May 8, 2013, 11:09 AM
Most Popular Articles
High School Student Creates Storage Device that Can Charge in 20 Seconds
May 20, 2013, 6:51 AM
Google Announces "Pure" Galaxy Nexus S4 for $649, Android Updates
May 15, 2013, 1:42 PM
Seawater Cooling Saves Data Center Big Bucks, Energy, Despite Jellyfish Issues
May 17, 2013, 3:23 PM
U.S. Federal Traffic Board Wants to Make Drunk Driving Threshold Far Harsher
May 15, 2013, 11:32 AM
Newegg Legal Chief: "We don't Feed the Trolls"; Defeats Bell Lab Shell Comp.
May 17, 2013, 10:11 AM
Latest Blog Posts
Quick Note: Sony "Teases" PS4 Ahead of Xbox Reveal in New Video
May 20, 2013, 12:33 PM
Nokia Introduces Instagram-Like App of Its Own to Help Lumia Sales
May 20, 2013, 7:10 AM
Parents of Pre-Teen Drivers Commonly Practice Distracted Driving Says Study
May 9, 2013, 7:16 AM
Apple's iOS 7 Running Into Internal Delays Due to Massive Overhaul
May 1, 2013, 4:26 PM
Elon Musk Willing to Spend More Money on Widening of 405 Freeway
Apr 26, 2013, 7:28 PM
More Blog Posts
Copyright 2013 DailyTech LLC. -
Terms, Conditions & Privacy Information