Tesla cuts losses but sees costly year ahead
Company cites expenses for Model X rollout
Musk: Upbeat on prospects for new crossover
LOS ANGELES -- Tesla Motors finished its first year as a full-fledged automaker with 22,477 cars sold, $2 billion in revenue and a net loss of $74 million.
The electric vehicle maker anticipates a more challenging sophomore year as it seeks to speed production, add to its product line and expand globally. With the r&d and production-line costs for the Model X crossover coming online, Tesla sees its cost structure increasing "significantly."
"We do need a new final assembly line, which we hope to transfer to in the third quarter or thereabouts," Tesla CEO Elon Musk said last week in a conference call with analysts. "Also there's a new [body-in-white] assembly facility ... where the Model X is built." He said a separate line would have to be built at the Fremont, Calif., plant when the smaller Gen III vehicle arrives in a few years.
Musk said raising extra capital "would be a good idea" to also finance construction of a factory to supply lithium ion batteries.
"The car business is truly staggeringly big -- $2 trillion in new-car sales," Musk said, adding: "It's a pretty big ramp ahead in terms of reinvestment."
Tesla's $74 million net loss for the year compares with a $396 million loss in 2012, on revenue of $413 million.
For the fourth quarter, Tesla reported a $16 million net loss, compared with a $90 million loss a year earlier. Revenue was $615 million, up 43 percent from the third quarter. Comparisons with the 2012 fourth quarter are difficult because Tesla had just begun assembly of its cars in pilot volumes.
As is its custom, Tesla also issued a second set of results that don't conform to generally accepted accounting principles. By these measurements -- which strip out certain expenses, lease accounting and employee stock-based compensation -- Tesla claimed a $46 million fourth-quarter profit, up from $16 million in the third quarter.
Looking forward, Tesla expects to sell 35,000 units worldwide in 2014, which would represent a 55 percent increase over 2013. Production should rise from its current rate of 600 cars a week to 1,000 a week by year end, supplier bottlenecks and battery shortages notwithstanding.
Musk said he is heartened by the strong demand for the Model X, even though the company has had "zero marketing" for it. He predicted that demand may exceed that of the Model S sedan.
"The fish are jumping in the boat. We're actually not trying to sell the Model X at all, and we're seeing a steady accumulation of deposits," he said, although declining to disclose how many.
Tesla plans to begin selling cars in China this spring. The company will build a Supercharger network there and find ways to charge vehicles in urban settings where most people live in apartment towers, Musk said. Expansion to right-hand-drive markets is scheduled to begin in the spring.
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