Tesla Motors To Be Profitable Selling Electric Cars By April, It Says

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Tesla Model S

Tesla Model S

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Tesla Motors announced its fourth-quarter and full-year results late yesterday, and offered some good news to the company's shareholders.

That would be the projection that Tesla Motors [NSDQ:TSLA] will operate at a profit in the current quarter, which ends March 31.

"We expect to be slightly profitable (excluding only non-cash option and warrant-related expenses) in Q1 2013," it wrote in a letter to shareholders on its financial results just after the stock market closed yesterday afternoon.

The prediction advances by almost a whole year the company's timeline for profitability, which had previously been set for the fourth quarter of 2013.

The company lost $90 million in the quarter on revenue of $306.3 million. Its losses per share were $0.65. And it repaid another $12.7 million of its $465 million low-interest loan from the U.S. Department of Energy.

Tesla said it built 2,750 cars and delivered 2,400 to customers from October 1 through December 31; it expects to deliver about 4,500 in the first quarter.

The company's stock, which had opened the day at $39.30, closed down slightly at $38.54 before the results were released.

[UPDATE: Shortly after the market opened this morning, Tesla shares fell below $35--tripping a so-called "circuit breaker" designed to slow short sales of falling stocks.]

After releasing the numbers, Tesla also held a conference call in which CEO Elon Musk, CEO Deepak Ahuja, and George Blankenship, vice president of sales and ownership experience, responded to questions from industry analysts and offered additional color on several issues.

'Cautiously optimistic'

Musk summarized the company's achievements and prospects this year as follows.

"We promised to do three things: We said we would start production in July (it was actually June), deliver 20,000 units in 2013, and by the end of 2013, we will exceed 25 percent gross margin--not including regulatory credits," Musk added.

He said at the end of the call that he wouldn't commit to being profitable in all quarters this year until he knew more about how the company's production, deliveries, and sales rolled out during the first half of the year.

"Maybe I'm hedging too much, but I don't want to be overconfident," said the usually quite confident Musk.

Tesla Motors CEO Elon Musk with Tesla Roadster

Tesla Motors CEO Elon Musk with Tesla Roadster

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"In the absence of some force majeure event--a giant earthquake, for instance--I'm confident that we will be profitable this quarter, and it's our aspiration to be profitable in subsequent quarters as well."

"I do think we'll be profitable in the second quarter, and subsequent quarters too. I'm cautiously optimistic about that."

The following points summarize other topics discussed on the call.

Reservations and waiting time

The company said it added 6,000 additional reservations for the Model S (and also Model X) during the fourth quarter, compared to 2,900 added the previous quarter.

Asked about reports that it was possible to get certain Model S configurations through a Tesla Store in about a month, Musk responded that the average wait time for a car is now about five months.

But, he said, certain high-end Model S configurations--the 85-kilowatt-hour battery model with air suspension, not in the new red paint--were available in six to eight weeks.

"If we were to close all of our stores worldwide right now," he said, "We would still sell out for the entire year."

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Comments (12)
  1. Great work John, as ever. I read the shareholder statement, looked at the balance sheet and P&L but that didn't give me the meeting review which you have.

    I can completely sympathise with the supply chain issue. I've been caught by supplier balls ups that led to me flying super heavy stuff around the world and taking a loss just to keep a customers. It's devastatingly annoying.

  2. You're 100% correct on the supply chain issue, of course, Brian. I work for a motor supplier and was contacted by Tesla several times about three different motor applications. My company eventually declined to work further with Tesla (at the time) due to the low volumes and the fact that the specifications were never really official.

    At the time, many brilliant people at Tesla, but limited money & resources made working with it very tough. That's meant to compliment Tesla for making so much progress. With limited resources and many suppliers declining to work with it, Tesla has still done a great job despite occasional problems typical for a new competitor.

    To face what Tesla has thus far and achieve what Tesla has is just amazing, IMHO.

  3. It's a serious challenger to Audi A8 ,BMW 7 ,Mercedes S as a status symbol for a younger tech savvy generation.For the over 50 age group Mercedes S means something and for today's affluent Tesla is all there ideals in an earth friendly package.It has much right to exist and succeed as model does and we should all hope it does.

  4. Thanks John Voelcker for an extremely informative and objective article detailing the story behind the numbers.

    Really helps under stand how profitability is something that doesn't happen overnight by just reaching production goals but only after the production process is fully rationalized.

    Fascinating to learn how analysts like IHS can make life difficult for newcomers by misinforming suppliers. Very insightful...

    Glad to learn that the most crucial factor -demand- isn't really an issue this year and since the effects of leasing, finance and lots of other measures Tesla could take haven't even kicked in yet I'm sure Tesla's future looks pretty bright for years to come.

  5. I'm in agreement with @ChrisO, John Voelcker has created a great article with well organized and explained details.

    It must have been extremely frustrating to Tesla employees to be ramping up production of their high-tech baby, only to see them pile up, waiting on tires to roll off the production line.

    If I'm reading numbers correctly, over half (1200+) of Model S's production delivered Q4 was built in just three weeks of December. (2400 of 2750 built in Q4 were delivered & Tesla was operating at 400 level for 3 weeks in December) This is pretty amazing milestone as number of Roadster's delivered was ~2400 total.

  6. Tesla's future sounds bright, they have done an excellent job of sticking to their set milestones. Looks to me like this little electric auto maker will be a perminate fixture on the automotive landscape. And Tesla may be the driving force in remolding that landscape.

  7. obama and elon can fly on taxpayer dollar wings, ha ha ha

  8. What's a troll doing out in daytime?
    Who's minding your bridge?

  9. If Tesla thrives (and so the signs are encouraging, already paying back some of that taxpayer's money) and forces the rest of the industry to early adoption of alternatives for petroleum like plug-ins it's the best money the taxpayer ever spent.

  10. Come on, John V., ban this clown already. You've written an outstanding article and most here have valid comments. Then, of course, you have Ms. Cox with the daily childish nonsense and name calling.

    If she truly cannot act as an adult, then there should be no room for her here, on a professional site.

    As for the article and Tesla, great news. One could nitpick, but the bigger picture is that Tesla is doing well. Sorry, Ms. Cox...

  11. John, I agree with everyone that this is one of the most well written articles I've seen regarding EVs in a long time.

    I am very proud of Tesla and what they have accomplished. When Lotus discontinued the Roadster gliders, I thought they were doomed. I thought there was no way they were going to survive for years without a product and produce their own design in high volume. They sure made a believer out of me. And, they continue to do everything right against a constant drumbeat of bias, sabotage and misinformation from the press and the analysts.

    Well done Telsa. People really do want 200-300 mile EVs and they are the only company getting it done.

  12. Did Elon say, April 1st by any cance ?

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