Electric car maker Tesla Motors ended a year of dramatic growth in 2013 by announcing in its fourth quarter and full year earnings report on Wednesday that it plans to significantly boost the number of its Model S cars shipped in 2014, and also confirmed that a massive battery production factory is planned with partners.
Tesla said it plans to boost the number of Model S cars shipped by over 55 percent in 2014 to 35,000 cars. Tesla shipped its first Model S about 20 months ago and in 2013 delivered 22,477 Model S cars. Tesla says it was able to hit its goal of 25 percent gross margin on these cars by the end of 2013 and will reach 28 percent gross margin by the end of 2014.
That increase in shipments means that Tesla will need to ramp up the amount of Model S cars it can make from 600 per week to 1,000 per week by the end of the year. The production increase will require extra factory build out and a reduction of “supplier bottlenecks,” according to the letter to shareholders. A big part of this growth strategy will occur with shipments to Europe and Asia. Tesla plans to ship its first Model S to China in the Spring.
But growth of Tesla’s future cars beyond the Model S will come with the help of a massive battery factory, which it’s calling the “Gigafactory.” Tesla CEO Elon Musk raised the idea of the Gigafactory in a previous earnings call, and said that to produce 500,000 of its Gen-III cars per year, Tesla would need to build a “giga factory” that would have the equivalent of all of the world’s current production of lithium ion batteries made just for Tesla in one factory.
In a letter to shareholders Tesla confirmed that the Gigafactory is in the works. The letter says:
Very shortly, we will be ready to share more information about the Tesla Gigafactory. This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation. Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years. This will also allow us to address the solar power industry’s need for a massive volume of stationary battery packs.
This week an analyst said that he thinks Tesla is planning on building the $2 billion Gigafactory in New Mexico, in partnership with battery makers Panasonic and Sanyo. Musk said on the earnings call that more information about the Gigafactory could come next week. A factory would require substantial capital to build. Musk said that the factory would likely use more than one partner.
For the full year 2013, Tesla announced revenue of $2.01 billion, up from $413.26 million in 2012. Tesla showed a net loss of $74 million for the full year, which was a much smaller loss than the $396.21 million for 2012. For the fourth quarter 2013, Tesla generated $615.22 million, with a net loss of $16.26 million; that was up from $306.33 million in revenue and a $89.93 million net loss from the year earlier.
Tesla shares are soaring on the news, and hit a record of $217 per share in after hour trading.