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Tesla’s Musk Sidesteps 2012 Model S Sales Target

September 22, 2012

Tesla’s Musk Sidesteps 2012 Model S Goal, Sees 20,000 in ’13

Along with starting production ahead of schedule in June, and producing at least 20,000 vehicles next year, the South African-born Elon Musk said he’s confident of Tesla Motors Inc.’s future profitability. Photographer: Ramin Talaie/Bloomberg

Elon Musk, co-founder and chief executive officer of Tesla Motors Inc. (TSLA:US), declined to confirm that the electric-car maker will be able to meet its initial delivery target for Model S sedans this year.

Tesla, which began building the luxury cars in June in Fremont, California, will deliver 20,000 of the sedans next year and achieve a gross margin of more than 20 percent, Musk said yesterday in a Bloomberg Television interview on “In the Loop with Betty Liu.”

The company in July said it was confident of delivering 5,000 Model S cars this year. Musk wouldn’t comment on that goal yesterday, saying that “I need to be very hesitant about talking about any near-term metrics for Tesla.”

The carmaker, which counts Daimler AG (DAI) and Toyota Motor Corp. (7203) as customers and investors, has set a goal of becoming profitable by as early as next year from sales the $57,400 Model S and Model X sport-utility vehicle due in late 2013. Tesla is trying to balance investor demands to expand its business as quickly as possible while also avoiding quality problems and delays that have hit rechargeable vehicle competitors including Fisker Automotive Inc.

“Should the company not meet the 5,000-unit goal, that will have some negative impact on revenue in the fourth quarter,” said Alan Baum, principal of auto-industry forecaster Baum & Associates in West Bloomfield, Michigan. That may not be an immediate concern for Tesla’s customers, he said.

Tesla ‘Supporters’

“People that are buying this vehicle now are supporters of the company, so to some extent whether the volume is 5,000 or 4,000 or even 3,000 this year, it doesn’t really matter,” Baum said yesterday. “In the longer term, it’s more important that the product be thought of positively. The last thing the company needs is to disappoint buyers. They haven’t yet and they don’t intend to.”

Along with starting production ahead of schedule in June, and producing at least 20,000 vehicles next year, the South African-born Musk said he’s confident of Tesla’s future profitability.

“The third thing is that we would achieve a gross margin in excess of 25 percent,” he said. “Of those three things, I stand by those.”

Since June, there have been “no recalls, no fires, no anything” in terms of assembly problems, Musk said. “First impressions matter.”

U.S. Loans

Fisker, a maker of luxury plug-in hybrid cars backed by U.S. government loans, said last month it planned to recall all of its $103,000 Karma sedans to fix a flawed cooling fan linked to a California fire. Fisker’s battery supplier, A123 Systems Inc. (AONE:US), recalled flawed packs in March.

Tesla has said has said it plans to begin repaying the Energy Department loan it received in 2009 late this year. The company, which sold shares to public for the first time in 2010, continues to study additional fundraising steps including a secondary share offering, Musk said yesterday, without elaborating.

Musk also declined to elaborate on the current production pace at Palo Alto, California-based Tesla’s factory. Musk, 41, said in a Twitter post on Sept. 16 that the rate had risen to 100 vehicles a week.

“Demand is not a problem for Tesla,” he said. “Probably the biggest reason people don’t put down a reservation for our cars is they have to wait too long to get it.”

Separately, Tesla said yesterday in a statement on its website that it’s adding 10 more stores this year, including one that was scheduled to open yesterday at the Roosevelt Field Mall in Garden City, New York. The new stores will give Tesla 24 North American outlets and 34 worldwide, the company said. The company is scheduled to unveil its “supercharger” system on Sept. 24 at its design studio in Hawthorne, California.

Tesla fell 2.8 percent to $30.02 at the close yesterday in New York. The shares (TSLA:US) have gained 5.1 percent this year.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Betty Liu in New York at bliu17@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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  • TSLA
    (Tesla Motors Inc)
    • $218.13 USD
    • -1.33
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