The dustup over the New York Times’ negative review of Tesla’s Model S electric car was all anyone could talk about last week. But the business story of how the pioneering auto maker, led by Elon Musk, will become profitable will begin to be revealed
on Wednesday afternoon, when Tesla holds its fourth quarter and full year 2012 earnings.
The end of 2012 was a pivotal time for Tesla. It transitioned from small-scale manufacturing of its Model S electric car — which won Motor Trend’s car of the year award — to its goal of volume manufacturing of 400 cars per week. That rate puts the company on schedule to make 20,000 cars per year, and that increase in production was just a few weeks behind schedule last year.
2013 is an even more crucial year for Tesla. The company is supposed to hit profitability at some point this year, based on its revenues from sales of the Model S. Analysts expect the company could reach profitability in June.
Tesla’s earnings on Wednesday could shed more light on
how close it is to becoming profitable. In the beginning of December, Musk tweeted that Tesla had narrowly become cash flow positive. I’d assume that meant for the quarter the company had more cash coming in than going out (though Musk didn’t specify the time period). So we can watch to see if the cash flow is identified for Q4 in the call.
We’ll also be watching to see if that production ramp rate was officially hit: 400 cars a week, and 20,000 cars per year. Finally listen for Tesla’s gross margins, which will be an indicator of how fast they’ll become profitable (12.5 percent for Q4, 2012, and a goal of 25 percent for 2013).
While Tesla has a lot of skeptics, it’s miraculously survived the hardest part of building an independent electric car company already. It held a successful IPO, as well as follow-on public financings, and it hit its production targets (mostly) on time. In contrast, the vast majority of electric car startups that have tried similar things have struggled and bowed-out in recent years, including Fisker, Think, Aptera, Bright Automotive, Better Place, and Coda.
If you’re still riled up about the New York Times’ test drive, the New York Times’ Public Editor came out with her final assessment on the situation, finding the review had “Problems With Precision and Judgment, but Not Integrity.” Musk appears to be happy with that call. Tesla’s stock was up 6 percent on Tuesday following the finding, and in anticipation of the earnings on Wednesday.