The market for electric luxury vehicles may not be as lucrative as many would have you believe, because it turns out that Tesla actually loses money for every Model S sedan that it sells. With more than $4,000 lost for every Model S sold, the company burned around $359 last quarter. That isn’t all that bad, however, and it’s not all that surprising either when you consider how new the company and the market are. Things should start looking up within the next few years.
It’s crunch time for Tesla Motors. The Silicon Valley automaker is losing more than $4,000 on every Model S electric sedan it sells, using its reckoning of operating losses, and it burned $359 million in cash last quarter in a bull market for luxury vehicles. The company on Wednesday cut its production targets for this year and next. Chief Executive Elon Musk said he’s considering options to raise more capital, and didn’t rule out selling more stock. Musk has taken investors on a thrill ride since taking Tesla public in 2010. Now he’s given himself a deadline, promising that by the first quarter of 2016 Tesla will be making enough money to fund a jump from making one expensive, low volume car to mass producing multiple models, and expanding a venture to manufacture electric power storage systems. Tesla’s shares fell almost 9 percent on Thursday and slipped another 2 percent on Friday as investors and analysts weighed the risks of Musk’s ambitious plans for expanding Tesla’s auto and energy storage businesses. Tesla had just $1.15 billion on hand as of June 30, down from $2.67 billion a year earlier.
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