Tesla Motors can generate positive cash flow with an annual order base of just 8,000 units, and the electric-vehicle maker is "highly confident" of reaching sales of 20,000 vehicles in 2013, CEO Elon Musk said today.
Musk, addressing shareholders at Tesla's annual meeting at the Computer History Museum in Mountain View, Calif., predicted the company would generate a 25 percent gross margin, with an operating margin in the low to mid teens, in the near future.
Tesla reported a first-quarter net loss of $89.9 million, worse than its $48.9 million loss last year, as the cost of bringing the Model S sedan to production mounted. First-quarter revenue fell to $30.2 million, from $49 million last year, reflecting the end of Roadster sales in North America.
Musk has described 2012 as a "year of two halves," with the Model S launch as the dividing line. Ninety percent of the company's revenue this year will come from the sedan. Tesla expects full-year revenue between $560 million and $600 million.
The automaker delivered the first two Model S sedans last week, and broader-scale deliveries will begin this month.
Pricing for the Model S starts at $57,400 and can go as high as $105,400 with longer-range and higher-performance battery packs. The vehicles are eligible for a $7,500 federal tax credit.
A 45-day nationwide road show starts June, Musk said.
Tesla will start selling the Model S in Europe and Japan in six months, and in China in 2013. Production of right-hand-drive models will begin in mid-2013.
Musk said Tesla is targeting sales of 35,000 in 2014, when the Model X crossover us scheduled to arrive.
Tesla had been cagey about the results of recent Model S crash tests, but Musk boasted that the Model S had received a rating of five stars from U.S. safety regulators in front, side and rear collision testing.
"If there were a sixth star, we would have been given one. This is by far the safest car on the road," Musk said.
Understanding that a high percentage of luxury-car shoppers want to lease their cars, Tesla will offer leases next year, said Musk, who was dressed informally in a black blazer, plum T-shirt and blue jeans.
"We may see an even greater proportion of our cars leased. The best way to see the cost advantage is through leasing. That way you can see the total monthly cost to operate a [Tesla] car versus a gasoline car," Musk said.
Further down the road, the "Gen III" sedan and crossover will arrive, although Musk declined to provide an on-sale date.
The Model X and Model S carry sticker prices comparable to the BMW 5-series. But the Gen III models will be comparable in price to the BMW 3-series, Musk said.
Tesla also plans a "super-charging" network to plug in Tesla vehicles that will "blow your minds," Musk said, without providing details.
But Tesla is more than about building its own cars. Deals to provide electric powertrains to Daimler AG and Toyota Motor are also accelerating, Musk said.
Tesla's deal to provide EV powertrains to Daimler constitutes "real volume, not just demonstration purposes," he said, and a new deal in the works is "larger than all past contracts combined."
And while the installation of Tesla powertrains into the Toyota RAV4 EV initially will be limited in volume, Musk is confident of "a transition to more of a mainstream, high-volume situation."
Musk said more stringent CAFE standards will prod automakers to use more electric vehicles to achieve the Obama's administration's planned 54.5 mpg fuel-economy target.
The cost of electric vehicles will continue to decline as battery packs see an 8 to 10 percent annual improvement in cost reduction and energy density for the next several years, Musk said.
Hard to compete
Musk also took a swipe at critics who have condemned government backing of green-tech companies such as failed solar-power firm Solyndra.
Tesla received a Department of Energy loan of $465 million, which Musk previously has said the automaker will begin repaying by the end of the year.
"Government support should be much greater than it is now. There are subsidies for sustainable energy, but they are nothing compared to the gargantuan ones for oil and gas. It's actually a negative tax on gas.
"Why are we massively subsidizing nonrenewable energy at the expense of sustainable energy? It just makes it harder for sustainable stuff to compete."