Tesla nimbly updates Model S over the air

DETROIT -- As a start-up company building a new vehicle in a new plant with many employees new to car assembly, Tesla Motors faces its share of challenges.

But Tesla's small size has meant that running changes and product updates have occurred quickly, said Jerome Guillen, the company's director of Model S programs.

Perhaps the most stunning innovation is the software updates that change vehicle driving dynamics, sent to customers' cars over the air rather than requiring a visit to a service location.

For example, early Model S electric sedans had no forward "creep" when a driver lifted his foot off the brake when fully stopped. The flush-mounted door handles needed to be pressed to "present" themselves to an owner. And there was no voice command available at launch.

All three updates to the vehicle were sent to the car's telematics system remotely. Owners now can set their car to creep -- or remain static -- when stopped. The door handles eject outward when an owner approaches. And voice command is a feature.

"We download the update, and you get a notice on the car's touch screen," said George Blankenship, Tesla vice president of sales and ownership experience.

"It tells you that you have an update, and that you can install it now or at 2 a.m. It has the 'release notes' of what is included in the download. When you come out the next morning, your car is different," Blankenship added.

A more tangible change has been the restyling of the car's nose cone. While there was no structural change to the car, the new look meant Tesla had to undergo another round of crash testing.

After early Model S buyers complained about the ergonomics of optional jump seats mounted in the hatchback area -- designed for kids -- Tesla has already made updates to address those concerns, Guillen said.

"We are doing things in a couple weeks that, at my previous employer, would have taken two years," said Guillen, who previously led the business innovation department at Daimler AG.

With Tesla's Fremont, Calif., assembly plant running at its full annualized run rate of 20,000 vehicles per year, the waiting time for a Model S has been trimmed to four to six months, depending on content, Guillen said.

Until this month, Tesla had been building the Model S equipped only with the top-line 85 kWh battery packs. But 60 kWh vehicles, with a lower price tag, will begin rolling down the line this month, Guillen said.

Because of SEC regulations, Tesla is not allowed to disclose the number of Model S sedans on order or delivered. At the end of the third quarter of 2012, the company had orders for 13,000 units. Guillen said the updated number is "significantly higher." The number of Model S orders on hand at the end of 2012 will be disclosed in early February.

Guillen also is working feverishly on prepping the Model X crossover for launch.

The Model X, which will borrow much of the Model S underpinnings, is still on schedule for a mid-2014 on-sale date. Tesla CEO Elon Musk cautioned that the launch might be slightly later in the year, noting that he has been "optimistic about projections" in the past.

The Model X development is undergoing the transformation from the functional initial prototype that was unveiled last year to a production-ready prototype. The company will be making final decisions on the interior and exterior dimensions of the car in the first quarter of 2013, Musk said in an interview.

A key part of the Model X will be its dual-motor all-wheel drive system, which Musk predicted would give the crossover "the best road handling of any car in the world."

Following the Model X will be an as-yet unnamed electric sedan about the size of the BMW 3 series. With a target price of $30,000 to $35,000, the smaller sedan will arrive in the next three or four years, Musk said.

"The focus is on cost down," Musk said in an interview. "We've got the range. We've got the capability and ride and handling. Now it's a question of how to optimize it."

Musk expects the fledgling electric car company to turn a quarterly profit in 2013 as sales volumes of the Model S sedan reach an annualized run rate of 20,000 units.

Musk did not say in which quarter he expected the profit to occur, but added that doing so would make Tesla "a real company."