Summary:

When it comes to predicting the future of electric car maker Tesla Motors’ business as a supplier of powertrain technology for major automakers, it’s like the old Magic 8-Ball said: Reply hazy, try again.

Model S

When it comes to predicting the future of electric car maker Tesla Motors’ business as a supplier of powertrain technology for major automakers, it’s like the old Magic 8-Ball said: Reply hazy, try again. According to Tesla CEO Elon Musk, who spoke in a call with shareholders and analysts Tuesday afternoon, the strategic decisions of about a dozen automotive executives will largely determine how Tesla’s nascent supply business takes shape in the year ahead.

“The consumer is a fairly objective decision maker,” Musk said. “We control our destiny in that situation.” As a result, the company is “more comfortable making predictions there,” than when destiny, or rather revenue, is dependent not only on Tesla’s performance, but also on the decisions of “a small number of people at the strategic level.”

As early as 2011, those fair-minded consumers will for the first time have some real choice in the market for plug-in vehicles, and Tesla’s mettle will be tested going head-to-head with global automakers. By 2015, the company plans to ramp up Model S production to 20,000 units per year — a dramatic shift, enabled by a Department of Energy loan, from the number of Roadsters that Tesla has sold since 2008 (just over 1,300, including 151 units during the three months ending September 30). While the company has yet to launch full-fledged sales and marketing efforts for the $57,400 Model S sedan (due for delivery in mid-2012), the company said on Tuesday that it has collected more than 3,000 reservations for the car, up from 2,000 at the end of last year and the more than 2,800 reservations reported in early August.

Asked whether Tesla is in discussions with other automakers that might be considering working with Tesla (in addition to Daimler and Toyota, which have both invested in Tesla and agreed to use its powertrain technology for prototypes), Musk replied that conversations are ongoing. “It’s difficult to say whether those will materialize into anything real. I think there’s a good chance that maybe one of them [will].” He added that Tesla is not “vigorously pursuing” other powertrain deals at this point because it wants to make sure that it can “execute well on the Model S, on the Daimler business and on the Toyota business.”

More supply deals early on wouldn’t necessarily be better for Tesla’s long-term goals. “If we take on too much business too soon we won’t be able to do a good job for everyone and still keep the Model S on track,” Musk explained.

For example, the RAV4 project with Toyota, which will be unveiled at the LA Auto Show next week, increases the load for a team already working to meet an aggressive timeline for the long-planned Model S sedan. Asked how much overlap exists between Model S and RAV4 powertrain development, Musk said that “The core elements will be substantially similar,” but the “system integration challenges” are different. “It does create a little bit of a drag coefficient on Model S development,” he said, emphasizing that, “We’re making sure it does not affect the overall timing of the Model S program.”

Ultimately, Musk expects that if any delays or major hurdles crop up for the Model S (which was initially targeted for production in 2009), it will be during the final stages, such as crash testing to meet 2012 safety standards. He said, “Getting those nuances just right is really the risk at the end.”

Image courtesy of Tesla Motors

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