Musk outlines sales goals
Tesla’s CEO predicts ‘several hundred’ vehicles a week by the end of this year.
Tesla CEO hopes for 200,000 Model S and X sales a year. He also predicts that all cars will be autonomous within 20 years.
Tesla Motors Chief Executive Elon Musk told investors that his Palo Altobased electric car company could experience “positive cash flow” in early 2016 and that the company could sell as many as 200,000 Model S and Model X vehicles a year in the near future.
The colorful executive — touting his company’s “autopilot” self-driving features while reporting thirdquarter losses of $230 million — also predicted all cars would be fully autonomous within 15 to 20 years.
“Any cars being made that don’t have full autonomy will have negative value,” Musk said Tuesday. “It will be like owning a horse. You’re only owning it for sentimental reasons.”
Musk declined to address rumors that his company is planning its own Uber-style ride-sharing or carhailing service, saying: “There is a right time and a wrong time to make future product announcements, and this is not the right time. Our plans are not fully baked.”
And he characterized the prospect of positive cash flow early next year as more a hope than a prediction.
“It’s an aspiration, not a promise,” he said.
Musk had other promises about production of the long-awaited Model X sport utility vehicle. Tesla recently announced the first deliveries — just six of them, and one to Musk himself — with great fanfare but has yet to outline a detailed schedule for mass production of its second model.
In an hourlong conference call with investors, Musk said the company could produce “several hundred” Model Xs per week by the end of this year and 1,600 to 1,800 per week by early 2016.
He also said the company was still on track to start building the promised more affordable Model 3 in 2017. Many investors see that vehicle as the key to Tesla having breakout success as a mainstream automaker.
The Model X was the subject of several delays as the factory floor was retooled for the new design. Customers who placed deposits as long as three years ago are still waiting for their vehicles.
Musk blamed some of the delay on the complex back seat design for the SUV, which has three rows of seats and can accommodate seven passengers. The factory ultimately had to begin building its own seats, Musk said, after suppliers encountered quality issues.
Tesla’s stock price rose in aftermarket trading, despite the reported loss. Analysts had mixed reactions.
“The numbers look good, and they don’t look good,” said Thilo Koslowski, vice president of Gartner. “The stock price goes up even though the company talks about a bigger loss than last quarter.”
The bullish reaction may be based in part on Tesla’s predictions for more deliveries and an expanding audience for its luxury electric vehicles, which typically sell for about $100,000.
Kelley Blue Book analyst Karl Brauer said that should help investors feel “less nervous” about production and delivery rates.
“There’s still the nearterm issue of Model X production and Model 3 launch timing, both of which need to remain on schedule for Tesla to keep growing sales,” Brauer said. “But for now the company’s third-quarter numbers appear close enough to keep Wall Street happy.”
Those rosy predictions may depend on Musk being right about the size of the global appetite for luxury battery electric vehicles — and on his company’s ability to remain the leader in that segment, Koslowski said.
“There is certainly a market for electric vehicles in the premium sedan and SUV categories, but there is going to be lots of competition from companies like Audi, Porsche and others,” the analyst said. “The market could represent even more sales, but will Tesla be able to claim them all?”
Musk also took issue with the California Air Resources Board, which has provided the bulk of the zero-emissions credits that Tesla has to date sold to other automakers for a total of $600 million.
Automakers buy the credits in lieu of selling more zero-emissions cars to meet California’s goals for reducing tailpipe pollution. Musk said the state agency is going too easy on the industry.
Tesla sold $45 million in credits in the second quarter and $39 million in the third, but advised investors that it did not expect to sell any in the fourth.
Musk implied that the declining sales of his company’s credits suggest that the air resources board isn’t doing its job.
“Frankly, we do not think CARB is being sufficiently stringent,” he said. “If we can’t sell ZEV credits, the regulations are not strong enough.”