Tesla Motors CEO Elon Musk with Model S prototype.
It’s never easy making money when you don’t have a product to sell. Just ask Tesla Motors. While the California start-up does have a small income stream from its contract work that wasn’t enough to head off a nearly $90 million loss for the first quarter.
But things could start changing in a hurry, according to Tesla, as the battery-car maker is apparently looking for a much earlier launch than originally planned for its new Model S sedan. Meanwhile, Toyota is also ready to start rolling out the new RAV4-EV it has developed as part of a partnership with Tesla – which could yield even more new business.
Tesla is describing 2012 as a “year of two halves.” Clearly, it would rather get through the first half as quickly as possible.
With the little Tesla Roadster now out of production the company generated just $30 million in revenue during the January to March quarter, down from $49 million a year ago. As a result, it saw losses shoot to $89.9 million, or $0.86 a share, compared to $48.9 million, or $0.51 a share a year ago.
Despite that disappointing downturn investors rewarded the company with a sharp rise in stock – jumping from less than $30 a share to as much as $34 during Thursday trading — based on reports that the maker will be able to get the Model S into showrooms by late in the second quarter.
That depends on getting through some final federal crash tests, Chief Executive Elon Musk said in a letter to shareholders, adding that, “Once we complete and document the tests, we will be able to sell our vehicles in the United States.”
According to Tesla, the maker now hopes to have as many as 5,000 of the Model S sedan sold – at prices ranging from $57,400 to around $100,000 – by year-end. And that actually won’t meet preliminary demand, the company noted, claiming to have orders already on hand for around 10,000 of the battery-electric vehicles.
The early launch, Tesla said, should add another $10 million to its full-year revenues, which now look to be somewhere between $550 million and $600 million.
“It’s showtime for Tesla,” declared a report on the investing site Motley Fool, author John Rosevear declaring there is a “very good reason” for Tesla stock to get a big bounce despite its poor first-quarter numbers. The early launch of the Model S, he added, “says a lot about the company’s ability to execute.”
Meanwhile, in a research note, Morgan Stanley analyst Adam Jonas said, “Tesla is entering one of the riskiest moments of its company’s history, so anything that supports an on-time launch should be viewed with some relief.”
The early launch of the Model S isn’t the only positive news for the Silicon Valley automaker. Earlier this week Toyota debuted the production version of its RAV4-EV, a battery-electric version of its popular crossover-utility vehicle. Tesla developed and produced the vehicle’s electric driveline.
For now, Toyota is taking a cautious approach to sales and is only planning to move 2,600 of the vehicles over the next three years. But if there’s strong demand that could grow, according to Tesla CEO Musk. “The odds of scaling up are good,” he told shareholders.
Tesla is working with Toyota on other projects and has also inked new business with Daimler AG for the development of future electric vehicles. The California firm also plans to start production of a second vehicle, the Model X battery crossover, in 2013.