Luxury electric carmaker Tesla Motors took a step closer to financial
viability Wednesday, as CEO Elon Musk declared the Silicon Valley start-up
will be profitable in the first quarter of 2013, after losing $90 million in
the last three months of 2012.
Tesla has been under the microscope after a public spat last week with
the New York Times. Industry observers regard its performance this year as a
barometer of whether Americans will adapt to all-electric cars.
The company's fourth-quarter revenue surged to $306.3 million from $39
million a year earlier. The company's shares fell more than $2, or 5.5% in
after-hours trading.
Full-year revenue was $413 million, with a loss of $396 million, or $3.69
per share.
"That's really an enormous amount of blood, sweat and tears to" be
profitable, Musk said in a conference call. "We're going to do it."
Still, questions remain about the level of future demand for Tesla's
vehicles, which range in price from $59,900 to more than $100,000. Americans
have not yet embraced cars powered exclusively by battery packs.
Sales of all plug-ins in the U.S. more than tripled from 2011 to 2012,
but the total -- 57,172, was less than 0.4% of the light-vehicle market.
Non-plug-in gas-electric hybrid sales were 434,498, or 3% of the total market.
General Motors sold 23,461 Chevrolet Volts in the U.S. in 2012, making it
the world's most popular plug-in vehicle. But the Volt has a gasoline
generator that kicks in when its battery charge is depleted.
Sales of the Nissan Leaf, an all-electric subcompact less than half the
price of the least-expensive Tesla, rose 1.5% last year to 9,819.
Tesla is still learning how to make cars and satisfy customers. Musk said
the average waiting time for a Tesla Model S is five months, much longer than
consumers wait for conventional vehicles.
Tesla said it made 2,750 vehicles in the fourth quarter and expects to
produce 20,000 this year.
The Model S ranges in price from $59,900 before tax credits to more than
$100,000. The less-expensive version has a range of 160 miles while the
most-expensive version has a range of nearly 300 miles. Musk said more than
half the sales have been for the 300-mile range package.
Motor Trend magazine named the Model S its 2012 Car of the Year, but its
performance in cold weather was called into question this month when New York
Times reporter John Broder ran out of power in a Model S he was test-driving
from Washington to Boston.
Musk later waged a public relations war against Broder, calling the
article "fake" and trotting out data to support his case. Broder said he
followed the instructions of Tesla officials.
"It does lose 10% of its range when it's really cold, but so do gasoline
cars," Musk said. "People forget about that."
Tesla said it plans to deliver about 4,500 vehicles in the first quarter.
The company slogged through several production issues in the fourth
quarter, with workers averaging 68-hour workweeks to make vehicles.
Musk said the company is making efficiency improvements at its plant in
California and is tightening its supply chain. Challenges lingered in the
fourth quarter when, for example, the company had to pay for an emergency
shipment of tires from a factory in the Czech Republic.
"I wanted to punch myself in the face for that one," Musk said.
Morgan Stanley analyst Adam Jonas commended Tesla's emphasis on quality
over production speed.
"We are convinced Tesla understands that its early deliveries must be as
close to perfect as possible," Jonas said.
Controlling spending is key to Tesla's success this year. Tesla told
stockholders in a letter that it had $221 million in cash left at the end of
2012 after burning through $102 million in the fourth quarter.
Musk said the company would reduce the number of temporary employees at
its Fremont, Calif., plant, but would increase its full-time work force by the
end of the year.
Musk, who also founded online payments firm PayPal and NASA contractor
Space Exploration Technologies, said Tesla may introduce a leasing option in
the second half of this year. It plans to upgrade and expand its fast-charging
infrastructure.
Tesla had 32 stores worldwide at the end of 2012 and plans to open up to
20 stores this year, including its first store in China this spring. It also
operates 29 service centers and plans to double that figure by the end of the
year.
Much of Tesla's start-up capital came from a $465-million Department of
Energy loan in 2009. The company recently made its first principal payment on
that loan.
