Tesla Model SEnlarge Photo
Along the way, the Model S picked up plenty of good press, including selection by Motor Trend as its “Car of the Year” and a pick by Green Car Reports as its “Best Car To Buy 2013.” Despite the occasional bit of questionable media coverage, the Model S was generally well received by those driving it.
Though 2012 sales of 2,650 units (including 2,400 in the fourth quarter) are below Tesla’s original projections, some 6,000 new reservations were received in the final quarter of the year. Musk attributes this growth to Models S awards, an announced end-of-year price increase and the start of a European marketing campaign.
Total reservations in the pipeline, factoring in cancellations, reached 15,000 at year end, up from 13,000 in the third quarter. To continue driving sales in 2013, Tesla plans on opening as many as 20 new retail locations worldwide, adding to its current 32-store base. Roughly half of Tesla’s new stores will be built in Europe and Asia, viewed as critical markets.
Revenue in the fourth quarter grew to $306 million, a five-fold increase from Q3 that can be attributed to Model S deliveries, final Tesla Roadster deliveries and income derived from development programs with Mercedes-Benz and Toyota.
Gross margin grew from negative 17-percent in Q3 to eight percent in Q4, thanks to greater Model S production efficiencies, the sale of regulatory credits and income derived from development services. Further cost reductions are planned throughout 2013, and Musk predicts ongoing improvement towards its goal of 25-percent.
Tesla still booked a loss for the fourth quarter, totaling $90 million under generally accepted accounting principles (GAAP). It ended the year with over $221 million in total cash, and is current on its Department of Energy quarterly loan payments.
Musk predicts a “slight” profit in the first quarter of 2013, though on a non-GAAP basis. Tesla should approach the break-even point for cash flow from operations, too, thanks to improved gross margins and a reduction in R&D expenses.
Musk is also calling for profitability beyond Q1, saying that Tesla is currently “on a journey to expand the presence of the Model S and turn profitable.”