Tesla Takes 500 Reservations For Model X, Due Out In 2013
Electric carmaker Tesla Motors has struck a chord with wealthy, environmentally conscious customers with its upcoming Model X, but it is still struggling to turn that enthusiasm into a profit.
The company has taken more than 500 reservations for the small, all-electric SUV, at the cost of $5,000 per reservation. The car will end up costing between $60,000 and $100,000 when it hits the market in 2013, depending on which options consumers decide to add. Those reservations could therefore result in an average $40 million in sales, Tesla predicts.
"From a customer standpoint, the Model X is clearly a home run," Tesla CEO Elon Musk told investors on a conference call to discuss earnings. "This is by far the best-selling product in company history by a wide margin."
Still, Tesla is losing money at a staggering rate. The company on Wednesday posted a 2011 loss of $254 million, a loss $100 million greater than it posted in 2010. It brought in revenue of just $204 million for the year.
Developing new products like the Model X is a costly endeavor. Tesla spent $208 million on research and development in 2011, which is more than the revenue that it brought in through car sales and more than it spent on anything else.
Currently, Tesla has just two models for sale: A two-seater roadster (named The Roadster) and a sedan called Model S. The company no longer makes The Roadster, which is only currently available in Asia and Europe.
The popularity of the Model X, which was unveiled last week, is also boosting interest in the Model S. Orders for the sedan went up 30 percent since the X was introduced.
The Model X is very photogenic: It comes with "falcon-wing" back doors that make it look like it might fly away. The doors open up, not to the side, and bend in the middle so they can be opened in tight spaces.
Tesla's cars are powered by lithium-ion batteries, like the ones found in cellphones and iPads. The Roadster uses 6,831 lithium-ion cells, which makes the battery large but light.
Musk said the company is gearing up to make a more mass-market vehicle, one that would cost about $30,000. He did not give any more details about what kind of car it will be, but said he's confident Tesla has the technological skills to start scaling up operations.
Because it costs so much to develop and build cars, small carmakers like Tesla have had a hard time being successful. Tesla has started doing more than just selling and building its own cars; it has signed deals with Toyota and Mercedes to help them develop electric cars.
Revenue from development services -- the money Tesla earned from deals with automakers like Toyota and Mercedes -- increased from $19 million in 2010 to $55 million in 2011.
CORRECTION: An earlier version of this story said that Tesla will stop making the Model S next year and start making the Model X in its place. That is incorrect. The company has not yet started production on the Model S though it is available for sale. Tesla has stopped production on its Roadster model.