Elon Musk hits the brakes on Tesla's e-SUV Model X production
While raiding showrooms for any Model Ses he can find to flog
Tesla's shares jumped seven per cent in after-hours trading after it announced a better than expected third quarter.
The electric car manufacturer delivered just under 8,000 Model S sedans in the three months to September 30, generated $851m in GAAP revenue (up 97 per cent year-on-year) and recorded a GAAP net loss of $74.7m (94 per cent greater the year-ago quarter's loss of $38.5m) or 60 cents a share.
On a non-GAAP basis, if you drop interest and stock-based compensation, Tesla's revenues for the quarter were $932m (up 55 per cent on Q3 2013) and it banked a small profit of $3m (down 80 per cent on last year's $15.9m) or 2 cents a share.
The non-GAAP sales beat analysts' expectations of $893.8m.
That was despite losing a month of production at its sole factory due to tooling up for its new SUV model, the Model X. The company responded to increased demand of the model S by selling off showroom motors, and any others it could get its hands on, executives said.
However, the good news was displaced by the announcement that the Model X would again be delayed – this time to the third quarter of next year.
“Making one of something is quite easy, making lots of something that will last a long time is quite hard,” CEO Elon Musk, adding: "I do think the X is going to be something quite special but it is hard to engineer and hard to produce.”
Musk told investors that he was confident demand for the Model S would grow by 50 per cent next year. In an official statement [PDF], he noted: "Our focus will be on scaling up Model S production over the coming year, so no major platform changes to the hardware are planned in the near term. There will, however, be several significant over-the-air software releases – at no cost to owners – that provide added functionality."
On a conference call with analysts, Musk was his usual cocky self: "We prefer to forgo revenue than bring a product to market that does not delight," he said about the Model X delay. "There are many other companies that do not follow this philosophy that may be a more attractive home for investor capital. Tesla is not going to change."
Taking a leaf out of the corny-job-interview guidebook, he explained that the company's biggest flaw was "being too perfectionist about our future products." The downside to that? People loving them too much. “We do no advertising, no endorsements. We don’t pay anyone to pretend they like our products."
In order to speed up production of the Model X, Tesla will reduce the number of options available.
As for the Model 3, planned for the mainstream market at $35,000 – half the cost of the Model S – it has also been put back to the end of 2017. Tesla is planning to use the money from Model X to fund it. ®