Tesla loss widens but EV maker expects to become profitable in Q1

LOS ANGELES -- Tesla Motors Inc. expects to become profitable in the first quarter as it works to reduce manufacturing costs and benefits from a backlog of Model S orders.

Tesla's fourth-quarter revenue jumped to $306.3 million compared to $39.4 million in the same quarter last year. The company increased fourth-quarter Model S deliveries to 2,400 vehicles compared to a total of 250 Model S units shipped over the three prior quarters.

Higher costs from manufacturing and supply chain inefficiencies incurred during the fourth quarter led to a net loss of $89.9 million in the period, compared to a loss of $81.5 million in the fourth quarter of 2011, the company said Wednesday.

Despite the wider loss, Tesla CEO Elon Musk told analysts and reporters on Wednesday that the company will make money for the first time this quarter. Musk also said during the call that he was "cautiously optimistic" that the company will generate net income in the second quarter.

"We really have a very high confidence that we will have a profitable first quarter, and this is the very first quarter that we have been at our target production rate," Musk said during the company's fourth quarter earnings conference call. "I think that's a pretty big deal."

"Significant progress" made so far this year in improving the efficiency of Tesla's manufacturing and supply chain has Tesla poised to earn a profit, which CFO Depak Ahuja said he expected to be slightly better than breakeven.

Musk initially expected the company to post its first quarterly profit in the latter half of 2013.

Musk said stable Model S production of about 400 vehicles per week, and a bank of more than 15,000 orders for the Model S, has the company poised to deliver more than 20,000 units of the sedan this year. Tesla's big focus this quarter will be making its manufacturing and supply chain operations more efficient, Musk said.

For the full year, Tesla posted a net loss of $396.2 million on revenue of $385.7 million compared to a 2011 loss of $254.4 million on revenue of $148.6 million.

Musk also disclosed Tesla's 2013 outlook and operating plans during the call and in a letter to investors. Highlights include:

• Increasing its retail network from 32 stores globally in 2012 to as many as 52 locations in 2013.

• Begin leasing in the United States in the second-half of 2013.

• Secure volume-based price cuts from parts suppliers.

• Reduce manufacturing hours from 68 per week in December to about 50 hours this month, helping to cut costly overtime pay for production workers.

The company's shares rose 6 percent on Tuesday to close at $39.28, the most in more than three months, after The New York Times said there were flaws in a critical review it carried out of the Model S.

While the paper has defended the accuracy of the story, the public editor of the Times acknowledged in an online column on Feb. 18 that there were "problems with precision and judgment" in the review.

Musk said last week the range test of the sedan by the paper was "fake," citing inaccurate details on speed, route, use of the heating system and for failing to properly charge the $101,000 car.

Tesla's shares fell 1.9 percent to $38.54 at the close in New York on Wednesday. They've risen 14 percent this year, compared with a 6 percent gain in the Standard & Poor's 500 Index.

Bloomberg contributed to this report