Tesla and the profitability; Musk is explaining

Posted on Monday, 26 January 2009 , 03:01:39 byEmil

Filed under teslaprofitabilitymuskceohvacroadsterTeslaRoadster

Tesla and the profitability; Musk is explaining

When Martin Eberhard - Tesla co-founded was ousted in 2007 as CEO, his departure reasons were not clear entirely. The principle owner plus present Tesla`s CEO, Elon Musk has shed light finally on this matter. On some e-mail to clients explaining the increases in price, Musk said the 2007 investors audit found the price to build the Roadster like planned is a whopping 140,000 Dollars. With a selling price planned as 92,000 Dollars, it is easy to detect a potential problem. 'An audit by one of the Series D investors in the summer of 2007 found that the true cost was closer to $140k, which was obviously an extremely alarming discovery and ultimately led to a near complete change in the makeup of the senior management team' wrote in some letter Musk.

Musk noted further the present price of building the auto is between 90,000 and 100,000 Dollars. Although the base price of the Roadster is now 109,000 Dollars, Tesla's fulfilling the orders for buyers who signed when its base cost was 92,000 or 98,000 Dollars, which means profitability is slightly off of reach still.

Helping bridge this gap, Tesla made the wheels of the turbine-blade a 3,000 Dollars option wrap, even though originally, they were supposed become standard. The charger, high-performance one, is allowing a 3.5 hour recharge at home, is also a 3,000 Dollars option. 'To bring the cost of the car down, we have reengineered the entire drivetrain. The body supplier was also switched out from a little company that was charging us nutty money and had a max production of three per week to Sotira, who supplies high paint quality body panels to Lotus, Aston Martin and others' Musk wrote.

'In the process, we had to pay several million dollars for a whole new set of body tooling, as the old tooling had been made incorrectly. The old HVAC system was unreliable and cost almost as much as a new compact car, so also had to be replaced. The wiring harness, seats, navigation system and instrument panel also had to be modified or replaced.

'A key requirement is that any company applying be able to show that it is viable without the loans' he affirmed. 'If we allow ourselves to lose money on the cars we are shipping today, we place those loans at risk. Mass market electric cars have been my goal from the beginning of Tesla. I don’t want and I don’t think the vast majority of Tesla customers want us to do anything to jeopardize that objective.

'We made the pricing changes to ensure the viability of Tesla in the long term, regardless of government incentives, but we hope the credit will offset the increase for most customers' he stated.