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
RE: Neat info
2/22/2013 7:22:13 AM
This is GROSS margin, not operating margin, and he's only halfway there right now. Tesla will need at least 10% margin to cover non-unit expenses even with minimal new car development. Most car companies get 20% gross margin, and they have far higher volumes with much lower R&D costs per car.
TSLA lost $900M since the IPO on R&D costs and Roadster losses (needed to get the company's technology up to this point) that they have to recoup with the rest of the margin. That probably amounts to 100k cars that have to be sold to make a net profit. As well as things are going for Tesla, even that isn't a sure thing.
Without the subsidy, he'd need double that at the same MSRP, or he'd have to raise prices, reducing sales. The business plan changes drastically and the company probably doesn't even get off the ground.
"I modded down, down, down, and the flames went higher." -- Sven Olsen
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
Porsche Macan V6 Diesel Bound for the U.S.
December 17, 2013, 10:36 AM
GM Could Release New EV, Updated Chevrolet Volt in 2016
December 16, 2013, 11:30 AM
Ford Says 70% of its Cars Will Have Start-Stop Tech by 2017
December 16, 2013, 10:57 AM
EPA Says Vehicle Fuel Efficiency Has Hit All-Time High
December 13, 2013, 10:04 AM
Carbon Fiber to Lower BMW i3 Repair, Insurance Costs
December 12, 2013, 2:12 PM
Cadillac ELR is Priced Out of Its League According to Consumer Reports
December 11, 2013, 11:51 AM
Most Popular Articles
Report: Windows 8.2 Revives Start Menu, Runs Metro Apps in Desktop Mode
December 10, 2013, 2:56 PM
Chinese Media Puts Positive Spin on Its Smog Problem, Touts 5 "Benefits"
December 11, 2013, 12:39 PM
China's Lunar Rover Enters Orbit, Prepares for Historic Sat. Landing
December 13, 2013, 5:00 PM
The History of Normandy: How Nokia Plotted a Low-End Android Line
December 11, 2013, 8:12 PM
Metro-Enabled Firefox Browser Expected to Land After Two Years of Work
December 12, 2013, 5:21 PM
Latest Blog Posts
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
Global Cyber Espionage Concerns Reveal Growing Cyber Armies
Nov 29, 2013, 11:04 AM
Is The Period Becoming an Expression of Anger?
Nov 26, 2013, 2:02 PM
NSA and Congress -- You Will Never Kill the Constitution, It's an Idea
Nov 10, 2013, 2:00 PM
AT&T Explores $100B+ USD Deal to Acquire Vodafone's European Operations
Nov 4, 2013, 7:34 AM
More Blog Posts
Copyright 2013 DailyTech LLC. -
Terms, Conditions & Privacy Information