New Model S Currently In Production
Tesla dropped from almost $40 to about $35 in the end of February after Q4 earnings. The company expects to make slight earnings in Q1 2013 but the company is struggling in an environment where their technology is more of hindrance than a convenience. Their newest model, which is currently in production is actually getting some pre-order cancellations, people who had to put $5000 to reserve a Model S are now backing out of the deal. Same goes for investors, who after realizing some discrepancies in how the company is being managed, pulled out of the stock. Yet the future remains bright for this company that may be a bit ahead of its time.
Too Many Expenses
Tesla is paying a high amount of expenses, and Q4 earnings showed no solutions for lessening the expenditures. Tesla is paying many of their employees too many overtime hours to get the new models out in time.They are currently producing 500 cars per week out of their Silicon Valley factory. Workers are working 68 hours a week, but an adjustment has cut those hours to 50 a week. The company is also paying premium for shipping materials, like importing tires from Eastern Europe. All of which is adding up to an absurd amount of expensive that aren’t being reimbursed by positive business. Tesla hopes to ship out 4,500 cars by the end of the first quarter of 2013 and claims that costs will reduce once profits come rolling in.
Breaking Even and More
Their fully electric car, the Tesla Model S creates zero emissions and starts at $52,400 for the basic model and climbs all the way up to $87,400 for the ‘performance’ model. The car plugs into any electric outlet and Tesla is opening more and more Supercharger road stations to their current network. At these stations, Tesla drivers get to recharge their car for free. California and Nevada currently have the most stations installed and more are coming to the East Coast, Texas, Chicago, and Seattle. An ideal situation would be to have a station every 120- 150 miles, said CEO Elon Musk.
The stock is currently priced at $36.63, up about 3%. Tesla is currently breaking even, but Q1 2013 is expected to make profit, making it the first ever positive quarter since their IPO in 2010. Tesla aims to build 20,000 cars this year, a staggering increase from the 3,100 cars in 2012.
By: Eva Cantillo