A slow launch but Tesla insists it can make up lost ground for the Model S in quarters to come.
Half empty or half-charged? That’s a question facing Tesla, the California electric vehicle maker, as it ramps up production of its first mainstream offering, the Model S.
The start-up seemed to be getting off to a fast pace when it delivered its first sedan two months ago. But Tesla has since revealed that the pace of production is going much slower than anticipated, rolling out barely 50 vehicles since the official Job One, only about half of those going to customers who have plunked down hefty deposits.
The maker – created by the same billionaire behind private rocket company SpaceX – has since been hammered by industry analysts but now insists it will make up lost time during the latter part of the year.
“The ramp-up is continuing, and we are getting a lot of invaluable information from having all these cars on the road,” wrote Tesla Vice President of Sales George Blankenship in a corporate blog.
Tesla claims to have more than 12,000 orders for the Model S, which ranges in price from $57,000 to more than $100,000 depending upon options such as battery range. With customers expected to put down deposits of $5,000 in advance that means it has taken in more than $60 million.
The Model S is Tesla’s first entry into the automotive mainstream, following its proof of concept the original Roadster sports car. The maker insists it is still on target to deliver 5,000 of the new sedans this year. But since formal production began on June 22 at an old Toyota plant near San Francisco the ramp-up has been much slower than expected.
As of last week, only 50 of the Model S sedans had rolled off the line, 29 for customers and another 21 to be used by Tesla’s small dealer network as display and test vehicles. The maker has told analysts it only expects to complete about 500 of the battery-electric vehicles by the end of September, though it downplays concerns that it is having quality issues.
Tesla spokesperson Shanna Hendricks told Green Car the maker’s “plan has been and continues to be a focus on quality while ramping up production of Model S. This plan has not changed, and there have been no unexpected challenges or issues.”
Perhaps not, but there appear to be a variety of different targets being attributed to the maker – which now claims it will be able to get 5,000 Model S sedans out the door by the end of 2012, and that it will substantially exceed that pace in 2013.
Tesla chairman and founder Elon Musk now says he is “highly confident” the firm will reach “an annualized run rate of greater than 20,000” by the end of 2012, which suggests that it could reach or exceed that figure for 2013 – if the orders are there.
That would be critical to ending a string of losses including one for $93 million, or $0.89 a share, during the second quarter. That was actually about 3 cents a share better than industry analysts had anticipated – though at a meager $27 million, revenues fell $3 million short of expectations.
In a recent letter to shareholders, Musk – who also founded Space Exploration Technologies Corp., or SpaceX – maintained earlier guidance projecting revenues will reach between $560 million and $600 million for all of 2012.
Not everyone is so confident. Theodore O’Neill, an analyst with Wunderlich Securities, said he expects Tesla to struggle to meet its target and has switched his recommendation from Buy to Sell.
“While we believe that TSLA is doing everything right from a business perspective and has demonstrated superiority of design, we believe the market may pause to see how it handles the execution, allowing the shares to retrace the year’s gains,” he wrote in a recent report on the carmaker.
After hitting a 52-week peak of $39.95, Tesla stock has been trading in the $25 to $28 range in recent days.