Tesla's Elon Musk told investors that the company can double Model S production while continuing to ready the Model X.
Elon Musk, Tesla’s billionaire chief executive, is confident about the company’s ability to double production of the Model S next year even as it prepares to launch its new Model X electric vehicle.
Musk told analysts during a conference call after the company showed what was on paper a loss of $30.5 million, which after the adjustments were taken off the books was actually a $26.3 million profit, that he was confident the company could ramp up Model S production even as it is stepping up work on its next introduction: the Model X.
Tesla is also making substantial improvement in its supply chain, which will also help the company meet its ambitious production targets, Musk said during a conference call with analysts.
“We’re able to attract the A-Team of suppliers now,” said Musk, whose company has managed to defy the conventional wisdom ever since it opened for business half a decade ago.
“I know IHS was predicting we’d be lucky to sell 3,000 cars,” he said. Tesla has now sold roughly 4,000 vehicles in each of the last two quarters and expects to hit its 20,000 unit sales target by the end of the year.
Musk said he expects sales in China and Europe will help Tesla reach its ambitious goal of building 40,000 units next year. Tesla is also making modest changes to the Model S to make more acceptable for customers in other markets. For example, the rear seat of the Model S is being refined specifically for customers in China, he said.
Meanwhile, Musk will collect $4.3 million in stock-based pay for work on the Model X sport-utility vehicle, which the board found “probable” the company will complete later, according to a filing with the Securities Exchange Commission.
The Model X should ready for production late next year for an introduction in 2015.
Musk’s award made up more than 20% of the $19.3 million in stock-based compensation Tesla reported for the second quarter. The pay, which doesn’t vest until the Model X is ready for the road, was among three adjustments of more than $16 million that Tesla used to explain why its $30.5 million net loss should be seen as a $26.3 million profit.
On the adjusted basis, Tesla’s quarterly profit was 20 cents a share, or 5 cents, excluding an adjustment for lease accounting. That exceeded the average of 10 analysts’ estimates for a 20-cent loss, sending the shares up 14% on Aug. 8. Excluding stock-based compensation from net income is more common in Silicon Valley than in the global auto industry.
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Sales of the Model X aren’t set to begin until late next year. During the earnings conference call, Musk said development of the vehicle is “swiftly rising” among Tesla’s priorities.
Musk’s stock-based compensation comes from a 2012 CEO Grant fund set up by the company in August 2012, Tesla said in the filing. The fund contains 5.3 million stock options and is released in 10 vesting portions when pre-determined performance targets are “probable of being met, regardless as to whether the related market condition is ever met.”
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Musk, Tesla’s co-founder, accepts only $1 in annual salary from the company, according to Tesla’s most recent proxy filing. The CEO’s fortune jumped $570 million on Aug. 8, after shares of Tesla rose. Musk has a net worth of $7.7 billion, according to the Bloomberg Billionaire Index, up more than 220% this year. He is now the world’s 162nd-richest person.