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Tesla Lost $746.3 Million in 2016, Delivered 76,230 Models S and X

Musk says Model 3 configurator is 3-4 months away

Tesla, the purveyor of luxury electric cars and batteries that expanded into solar energy panels with its acquisition of SolarCity last year, posted a net loss of $746.3 million for 2016 on $7 billion in revenues, of which $5.59 billion were automotive revenues. The Palo Alto, California-based automaker announced in its fourth-quarter and full-year report Wednesday that it delivered about 22,000 vehicles globally in the fourth quarter, for a total of 76,230 for the year.

In Tesla’s web conference call with Wall Street analysts, CEO Elon Musk indicated that the $35,000 Model 3 sedan is on-schedule to begin production in the second half of the year. The first cars off the line will go to employees, he said, “because it’s good to have a feedback loop before customers experience them.” (This is known as “captive fleet” in Detroit.)

Tesla’s configurator for the Model 3 will not go online until shortly before the car goes on sale, Musk said. “I think it’s probably three to four months away.”

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He described a few details of how the Tesla Model 3 will be a simpler, cheaper-to-build car than the Model S and Model X, both of which are typically optioned to well above $100,000.

“It’s going to be a very compelling car, but a simpler design,” Musk said. “We understand car production much better than in the past.”

The Model 3 will have one screen inside, with one power source, in place of two screens and two power sources of the S and X, he said. It will have 1-1/2 kilometers of wiring instead of 3 kilometers and fewer luxury features like the self-presenting door handles in the S and X.

Will the Tesla Model 3 be profitable from Day One? One analyst asked.

It “will not be profitable because of exponential production numbers,” Musk said, referring to the time it takes to ramp up to what he said is a 5,000-vehicle-per-week capacity. But Musk suggested Tesla will reach Model 3 capacity by the end of the year, at which time the “affordable” electric car will be “pretty close” to having the same profit margin as the Model S and Model X.

Tesla and Wall Street analysts have suggested that the Model S and Model X enjoy a 20-25 percent profit margin, which traditional automakers, with their ability to buy parts by the millions, only enjoy with high-end exotics and sport/utility vehicles with internal combustion engines. Despite Tesla’s unit margin, the company has rarely reported a net profit. Tesla posted a net profit for only the third quarter of last year, with losses for the other three quarters.

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While 2016 deliveries fell short of the 80,000 units analysts had expected, Tesla said about 2,750 Model Ses and Xes missed delivery to Europe and Asia before the end of the year because of “short-term production challenges starting at the end of October and lasting through early December,” when the company made a transition to its latest Autopilot semi-autonomous hardware. Another 6,450 vehicles were in-transit to customers at the end of the year and will be counted as first-quarter 2017 deliveries, Tesla said.

Of the 22,000 or so delivered globally in the fourth quarter, 12,700 were Tesla Model S sedans and 9,500 were Model X sport/utility vehicles.

U.S. consumption accounts for roughly one-third of Tesla’s global sales. In 2016, Tesla sold 26,725 vehicles in the U.S., according to Automotive News, up 5.4 percent. That consisted of 24,000 Model Ses and 2,725 Model Xes.

Musk reassured the investment community that Tesla would meet his previous production plans.

“I currently think we ought to be able to build a half-million in 2018 and 1 million by 2020.”

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