By on October 31, 2011

According to Tesla CEO Elon Musk, the EV luxury brand has pre-sold all 6,500 units of its new Model S to be built next year, and the company is on-track for a 2013 profit. Bt if you’re comparing Tesla to the erstwhile EV darling BYD in order for it to look good, you have to wonder how good things really are. If anything, Tesla should be compared to Audi, an established (and hot) luxury brand with the same EV technology and one of Tesla’s founders on board. Losses for this fiscal year are estimated at $437m, and Tesla’s crucial loans from the Department of Energy are attracting a distracting investigation in the wake of the Solyndra scandal (but hey, Musk is “personally guaranteeing” those loans, so no worries…). And, in a truly puzzling move, Tesla is ignoring the SAE J1772 protocol for rapid EV charging because it isn’t sexy looking enough. As EV guru Chelsea Sexton puts it to the New York Times

It’s hardly unusual for Tesla to zig where the rest of the industry zags. But it’s particularly counterintuitive not to use the J1772 standard, since Model S drivers will be more interested in public charging than Roadster owners. Tesla’s proprietary connector choice requires getting customers to care about form over function on one of the most utilitarian aspects of the car. How many people stare at a gas nozzle and think, ‘If only that were better looking’?

Selling out of a first-year production run is good news, but hardly surprising (all plug-in vehicles are currently capacity-constrained). Preventing buyers from using public charging infrastructure because it’s unsexy is the kind of surprising news that could seriously damage Tesla’s long-term efforts. Meanwhile, we still don’t know how this company will do with regards to manufacturing quality and reliability, especially as volumes ramp up to 20k units per year. After all, Tesla’s hype and niche marketing efforts are well-proven… it’s all the other aspects of building and selling cars that we’re still unsure about.

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10 Comments on “Musk Sees Tesla Profit In 2013, But Losses (And Issues) Are Still Piling Up...”

  • avatar
    The Doctor

    Clearly, all the problems are as a result of the BBC’s negative coverage of the Roadster.

    Incidentally, it looks like traders have smelt a muskrat and are shorting TSLA big time.

  • avatar

    The emphasis on form over function is quite characteristic of Tesla. The company I work for quoted them on a sound system and they insisted that the AM/FM radio antenna be concealed in the outside rear view mirror despite our warning this would not work very well.

  • avatar

    “…the EV luxury brand has pre-sold all 6,500 units of its new Model S to be built next year”

    That’ more than the Volt can say about its sales prospects.

    As for the plug, you fail to include this detail mentioned in the NYT article: “Despite Mr. Musk’s criticisms, Tesla is hedging its bets. It plans to make an adapter available to connect the Model S to public charging stations that use the J1772 standard.”

    A little more “T” in TTAC, please.

    On the subject of rapid charging, I remain very concerned that this practice will present serious performance and warranty issues for the customer and manufacturers alike, and even possible safety issues. Charging a lithium ion cell is NOT a simple matter of doubling the current and halving the time. Any EV mfr is looking at long-term headaches once they experience customer complaints resulting from rapid charging, which is certain to become a widespread practice.

  • avatar
    Chicago Dude

    “And, in a truly puzzling move, Tesla is ignoring the SAE J1772 protocol for rapid EV charging because it isn’t sexy looking enough”

    “Preventing buyers from using public charging infrastructure because it’s unsexy is the kind of surprising news that could seriously damage Tesla’s long-term efforts”

    You know Ed, the article you linked to says that Tesla will be providing a J1772 adapter so people can connect to the public infrastructure that uses J1772. You also know that Musk’s main complaint with J1772 is not that it unsexy. It’s that J1772 is a low-power connection. The Tesla charger will charge the car faster. You must surely also know that Tesla is just one of at least half a dozen other EV makers (including Nissan, Mitsubishi, and Toyota) working on charging systems that are more powerful than J1772.

  • avatar

    We all like to dump on Musk (wow, that sounds kinda funny if you say it out loud) because he says and does things that have no basis in reality, but I really would like Tesla to work out. It would be nice to have a domestic brand that makes money based off of electrified sedans instead of fleet truck sales.

  • avatar

    I’m not sure what all the negativity is about. He sold about the number of Roadsters he expected to sell, Model S seems to be progressing well, and he’s already sold his first year’s production. Furthermore, he’s gained some revenue by licensing technology, and he has all the capital he needs to see through Model S production.

    The only real concern I would have is that he’s discontinuing the Roadster. Mercedes doesn’t discontinue the SL550 roadster because they are now working on their E550 sedan, or even the CLS550 coupe-style sedan. It seems to me he would be much better positioned if he had a product line of two vehicles than just one. I gather Lotus discontinued the underlying Elise but I’m a little surprised they could not update the Roadster to deal with this.

    He did look pretty nervous in the interview. He’s no Bob Lutz, that’s for sure. I could imagine Maximum Bob towering over the interviewer, saying directly and forcefully “We all know BYD is a piece of junk … it is in no way comparable to our beautiful Model S …”. That happens to be true, and that’s the kind of thing that makes interviews fun.

    That being said, so far, so good. I like the styling of the Model S. I’m not so sure about the instrument panel being all digital. I like handling real buttons and knobs. On the other hand, I said that of the iPod before the iPhone came out and showed us how interfaces were really done.


    [Not an investor in Tesla or any other automaker at this time. Frankly, I think Tesla stock is awfully pricey for what it is.]

    • 0 avatar

      I think Tesla discontinuing the Roadster has more to do with them not actually baking the whole pie there. I mean a Roadster is a Lotus put through a tuner-program, unorthodox as the tuner program is. The Roadster is a Saleen for eco-nerds and Musky wants to be a mainstream-car maker.

      On a side-note I think the Model S is a neat concept, but when you look at the teething problems of something like the Nissan Leaf – from a ‘real’ automaker and all the resources and experience that entails – making the Model S a ‘mainstream’ car in actual function is a long-shot stock to buy. The range estimates seem a little ambitious, and the unlike an exotic little roadster, reliability is a feature and not a bug in a mainstream sedan. It will be interesting to see how the actual machine works.

      And when you look at the fundamental engineering challenge: Taking something that’s twice as heavy as the Roadster, giving it twice the range, at half the price, again that is a pink-sheet stock with potential but its OTC for a reason, you know what I mean? A lot of speculation there. Only the real widget will tell.

      On side-note, the whole cosmetic fixation with the charger-dock reminds me something the late Steve Jobs would freak-out about. He’d shoot-down the Back-to-the-Future Mr. Fusion DeLorean because it had too many buttons. Maybe Musk is a little bit like Jobs, that can be very good or very bad.

      • 0 avatar
        The Doctor

        I suspect it’s more a case of “Musk would like to be a little bit like Steve Jobs” and that by obsessing over the charger design he’s hoping to convince investors that they’ve got another Apple on their hands.

        Mind you, Musk has managed to perfect the weapons-grade-cock aspect of Steve Jobs’ personality.

      • 0 avatar

        Roadster curb weight is about 2700 lbs, Model S will weigh around 3800-4000 lbs.

        Heavy, but pretty close to purported competition (MB E-Class, BMW 5 series, etc).

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