Electric-car maker Tesla Motors Inc.
on Wednesday reported a wider fourth-quarter loss and promised new cost
cuts, but said production of its Model S sedan is running at a rate of
20,000 vehicles a year, a key benchmark for investors.
The Palo Alto, Calif., auto maker said higher expenses for
manufacturing and sales operations contributed to a loss of $89.9
million, or 79 cents a share, compared with a loss of $81.5 million, or
78 cents a share, a year earlier. It also missed its target for
fourth-quarter production.
Tesla shares fell nearly 8% in late trading on Wednesday after declining 74 cents to $38.54 in 4 p.m. Nasdaq trading.
The company said its store of unrestricted cash had dropped to just
under $202 million at the end of the quarter, and it promised a fresh
round of cost cutting measures.
Tesla Chief Executive Elon Musk
said he is confident the company will be narrowly profitable this
quarter, and forecast deliveries of 20,000 Model S battery-powered
sedans this year. In an interview, Mr. Musk said he doesn't expect Tesla
will need to raise additional money through share sales or debt
offerings to fund the "couple hundred million" dollar costs of bringing
its Model X electric sport utility vehicle to production by 2014.
Instead, Mr. Musk said he expects Tesla will fund the new model from
customer deposits and profits from what he forecast will be about $2
billion in annual revenue. "I'm talking about good old profits," he
said.
Mr. Musk also doesn't plan to seek more investments from partners Toyota Motor Corp.
or Daimler
AG. "We are not looking to raise money or sell a chunk of the company," he said.
In
the short term, Mr. Musk said Tesla is focusing on cutting
manufacturing costs, including cutting temporary positions at its
factory, and smoothing out parts supply problems that at one point
forced Tesla to airlift tires from the Czech Republic.
Tesla in November had projected fourth-quarter Model S deliveries of
between 2,500 and 3,000 cars. The company said Wednesday it fell short
of that goal, delivering about 2,400 cars. Peak production "coincided
with vacations during the holiday season," contributing to the
shortfall.
Analysts said ahead of Wednesday's disclosures that the
fourth-quarter results—and especially hitting the 20,000 annual rate for
Model S production—would be critical to the company's effort to
convince investors that it can find a road to long-term viability.
Mr. Musk wrote that customers placed orders for some 6,000 Model S
cars in the fourth quarter, up from about 2,900 orders in the third
quarter of the year. Factoring in cancellations, Tesla said it has
"reservations" for about 15,000 Model S cars, up from 13,000 as of Sept.
30. Investors are closely watching the pace of new orders and
cancellations, in part because Tesla has to refund deposits from
customers who decide not to take cars.
Mr. Musk also said, in a Nov. 5 letter to shareholders, that the
company would by the end of 2012 "get approximately halfway to the 25%
gross margin target." The company said its fourth-quarter gross margin
was 8% of sales—but higher parts prices and high costs in the company's
Fremont, Calif., factory weighed on margins.
Tesla said that now that Model S production has stabilized, it has
"shifted our focus to cost reduction" and says it expects to achieve a
25% gross margin by the end of this year.
Tesla has reported a loss every quarter since it went public in 2010.
Tesla said it made its first quarterly principal payment of $12.7
million on $465 million it borrowed from the U.S. Department of Energy.
Last September, Tesla negotiated more breathing room on the terms of
repaying that loan and sold more shares to negotiate a revenue squeeze
caused by delays in production of the Model S.
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