News Column

Tesla Production Exceeds Goals

July 15, 2013
Tesla Model S
Tesla Model S

Tesla Motors chief executive Elon Musk delivered a teaser for the electric carmaker's second-quarter earnings this week, divulging Model S output had surged past its initial weekly goal.

The target was to build 400 sedans a week, the pace of manufacturing has already exceeded that -- "and not trivially," Musk said Wednesday. He also said he expected production to hit 800 cars per week by late next year, adding, "I'm very confident we'll get there."

Tesla has been riding high lately. On Monday, the company will join the Nasdaq 100 Index. The Palo Alto, Calif., automaker's market cap as of Thursday was just over $14.4 billion. The stock has been hovering between $122 and $125.

In June, the luxury electric carmaker reported 8,931 sales for the first half of the year, leaving it shy of its goal to deliver 21,000 cars by year's end (Musk raised the goal from 20,000 in a statement on the company's website in May).

Joe Langley, principal analyst for IHS Automotive, said these recent vague-but-promising production numbers might put Tesla back on track. "What I thought was interesting was that (Musk) said it was materially above 400 cars a week, not just a minor thing," Langley said.

A Tesla spokeswoman said the second-quarter earnings report should come in the next few weeks.

Tesla's recent prosperity could be merely the result of carmaker meeting pre-existing demand. "The $64,000 question," Langley said, "is can (deliveries) stay at that volume once the initial batch of orders is fulfilled?"

The high-end electric vehicle -- the Model S sedan starts at US$62,400 after a $7,500 rebate -- has built a loyal following of drivers who, Langley said, seem to "believe in the car's mission" as much as early Prius adopters did in their unconventional hybrids. "Any automaker would kill to have customers that ingrained in it," Langley said.

The challenge lies in converting drivers from the sidelines. While EVs have struggled to gain traction among the majority of consumers, Tesla might be in the best position to launch the electric revolution into the high gear advocates want.

"This is where the mainstream manufacturers haven't been as successful with electric cars," Langley said. "Tesla from the ground up is an electric vehicle. It's better packaged, and it has this greater mission to create EVs, to have the world switch to EVs. I've seen people (where) this is most expensive car they've ever owned by a long shot. They're stretching because they believe in the mission that much."

-- Los Angeles Times

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Source: Copyright Winnipeg Free Press (Canada) 2013

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