Print 24 comment(s) - last by Jeffk464.. on Feb 24 at 10:21 PM

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

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: Neat info
By Reclaimer77 on 2/21/2013 7:06:20 PM , Rating: -1
Musk is rich. He should be selling these things at a near-loss. Instead he's fleecing the taxpayer's by making an outrageous profit on impractical toys for rich boys, and getting subsidies while doing it.

That is seriously fucked up.

RE: Neat info
By tng on 2/21/2013 10:03:08 PM , Rating: 2
Musk is rich. He should be selling these things at a near-loss.
He will be even richer if Tesla continues to do well and post at least consistent orders.

Also if Space X does well with commercial launches he will be even richer.

RE: Neat info
By toyotabedzrock on 2/22/2013 2:10:52 AM , Rating: 1
The subsides have worked in this case. He developed a car that will soon be profitable without the subsidy.

But it wasn't until recently. Now the subsidy is producing its second goal of artificially lowering the price so that the associated parts also start to come down in price.

The third goal is for this technology to spread to other automakers and lower priced cars.

RE: Neat info
By Jeffk464 on 2/24/2013 10:16:51 PM , Rating: 2
Don't forget he also got a contract with Toyota to build the electrical setup for the EV rav4.

RE: Neat info
By Mint on 2/22/2013 7:40:20 AM , Rating: 1
Tesla has $900M in losses to make up. It would be impossible to do that selling cars at a near-loss. 25% isn't an outrageous profit for this class of car, and BMW/Mercedes/Audi are probably making more in this category.

Musk is rich from his share of Tesla, SpaceX, and SolarCity. He doesn't have $1B in cash/bonds/real-estate to fund anything. If he did, he would have kept the company private and owned 100% instead of 29%.

RE: Neat info
By Jeffk464 on 2/24/2013 10:20:33 PM , Rating: 1
I though he was rich from paypal, I don't think he needs the money from any of this stuff.

RE: Neat info
By Paj on 2/22/13, Rating: 0
"I f***ing cannot play Halo 2 multiplayer. I cannot do it." -- Bungie Technical Lead Chris Butcher

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki