SUSIE GHARIB: Shares of Tesla Motors (NASDAQ: TSLA) revved a little higher after the auto maker reported a quarterly loss that was smaller than expected. Tesla lost more than $41 million. That works out to $0.44 a share. Analysts expected the company would be $0.52 in the red. Now despite the loss, total revenues were the highest in the company`s history. Still, Tesla is not expected to make a profit until its second electric car, the Model S, comes out next year. Our Silicon Valley reporter, Robin McElhatton, recently sat down with Tesla CEO Elon Musk and began by asking how Tesla is changing the way that consumers shop for cars.
ELON MUSK, CHAIRMAN & CEO, TESLA MOTORS: We`re really trying to create something that`s fundamentally different from the typical car buying experience. We`re locating the stores in shopping malls and there`s those interactive videos. You can design the car in the store. You can see what it looks like, pictured in different environments. Electric cars are a very new thing to most people. If they`re not familiar with how electric cars work, how they, you know what do you do about the range, how do you recharge them, are they safe, what`s really cool about an electric car. And so that`s the story is about educating people, not just about Tesla, but about how electric cars can be fundamentally superior and a better experience than a gasoline car.
ROBIN MCELHATTON, NIGHTLY BUSINESS REPORT CORRESPONDENT: You were the first out of the gate to manufacture an electric vehicle sports car, the roadster. You`ve sold about 1500 so far. How many do you expect to sell total before you stop manufacturing the roadster?
MUSK: The roadster is the first viable electric car of the modern era. So it`s therefore I think a great collectors` item and that`s how we`ve designed the roadster program, to be something that is quite scarce. So that if you`re an early roadster customer and you`ve taken the chance of buying a car with us, on a new car company with a new technology, well, there ought to be some sort of reward for that. And that`s why we`ve intentionally constrained the volume of the Tesla roadster to only around 2400 vehicles. And in fact we`ll stop taking orders on the Tesla roadster later this year, in the United States and then early next year in Europe and Japan.
MCELHATTON: And you`re currently gearing up to manufacture the Model F sedan. Can you tell me about that, you know, how many do you expect to sell per year? What`s the price point there? Will it still deliver mid 12`s as you expected?
MUSK: We do expect to start deliveries in the middle of next year, so things are on track as far as that is concerned. We are aiming for around 20,000 vehicles a year. That will take us several months to reach that production rate. So it will probably be late 2012 or early 2013 when we`re at an annualized rate of 20,000 a year. Then we`ll keep introducing additional products, so at the end of this year, we`ll be unveiling for example our Model X which is a crossover SUV. It`s a very innovative design.
MCELHATTON: You have Federal loans to help you manufacture the model F?
MCELHATTON: Will that loan, those monies be put into place for future vehicles as well?
MUSK: Our default plan is to fund the development of new vehicles by raising private capital. And so it`s possible that we may be able to get some additional government loans, but we`re not counting on that. If we do get additional government loans, it will speed the process, by which we can accelerate.
MCELHATTON: The company has not been profitable yet. When do you expect that Tesla will be profitable?
MUSK: We`re aiming for 2013. And I take it we were profitable for one month. It was a minor blip. We`re proud of that month, but it`s difficult when going from the roadster to the Model S and ramping up production by a factor of 30 and with all the capital investment that requires, it`s difficult to be profitable as a whole. But if you look at Tesla`s business lines, the roadster business line and our power train business line, those business lines are actually quite profitable in and of themselves. It`s just that we`re spending half a billion on the Model S. But likewise we expect when the Model S starts production, not long after it starts production, that we`ll be profitable.