Elon Musk: Tesla on track despite delays

2015-01-14 12:30
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Tesla car. (Duncan Alfreds, Fin24)


Detroit - Tesla founder Elon Musk said on Tuesday the luxury electric car manufacturer Tesla is on track despite sales problems in China and the delay to the eagerly-awaited Model X crossover.

The Silicon Valley inventor and carmaker said the company would release the gull-winged Model X in the early second half of this year and is aiming to produce half a million electric cars by 2020, up from more than 30 000 in 2014.

But he added the prospect of low fuel prices in the coming years due to oil and gas reserves tapped by fracking threatens the electric car industry.

"The need for sustainable transport is incredibly high, even in the face of massively declining oil prices," he said in a rare public appearance at the auto show in Detroit, the hub of the US car industry.

"It becomes more urgent that automakers transition to electric and put a huge amount of effort behind electric vehicle programmes."


Musk, who made his fortune building the online payments company PayPal and has been regarded with suspicion and even derision in Detroit, would not give numbers on sales last year of the $80 000 - $100 000 Model S.

In early 2014, the company put the sales target at 35 000 units, but later cut that back to 33 000, and some analysts doubt it reached that goal.

But he insisted that US sales went as planned, numbers in Europe were better than expected, and that mainly China was a disappointment.

"We're pretty happy with the number of cars that were produced and ordered," he said.

Chinese sales of the Model S were hit by rumours late in 2014 that owners would not be able to recharge them at home, which he said was totally untrue.

After going public last year, Tesla's shares soared to give it a market value of $35bn after producing cars for less than a decade, and producing 1% of the number of cars sold by Ford, whose value is less than $60bn.

The shares have since pulled back by nearly one third, but critics say that is far too much for a small specialty carmaker that loses money.

While the company is making an operating profit, the huge costs of expanding its line and output from its Fremont, California plant and a massive investment in a $5bn Nevada auto battery factory, are keeping its cash flow negative.


Speaking to the Automotive News World Congress in Detroit during the annual auto show, Musk said he believed Tesla would be able to launch the planned Model 3, a much more affordable small electric car in a couple years.

He said he aims to ramp up production to 500 000 units annually by 2020, a level that would make the company much more than a niche player.

By that time, too, the company will be making a real profit, Musk predicted.

But critics warn Tesla faces a fresh challenge from the Chevrolet Bolt electric crossover unveiled in Detroit on Monday by General Motors.

GM says the Bolt could hit the market in 2017 with a price in the $30 000 range, the same market segment the Model 3 is aimed at.

But Musk said he welcomed more participants in the electric vehicle market.

Tesla is "cutting a path through the jungle to show what can be done with electric cars", he said, urging other companies to follow suit.

But he warned that lower petrol prices could act as a disincentive for buyers and for large automakers to invest in electric.

He said fracking could potentially release 10 times the amount of oil and gas resources that the world has now, keeping fuel prices low for a very long time.

"We do have significant danger with fracking technology which I think is still at an early stage," he said.

He warned the potential damage to the climate is much greater than it was before," increasing the need for a more environmentally-friendly car.

"If we can maybe go electric sooner, that would be much better for the world."

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