“We can’t sell this car at a loss,” Straubel told reporters
While those who look at fundamentals discuss whether the 4Q12 loss on ~2,750 Model S deliveries will be $60 million or only $35 million, it might help to revisit a 3-17-11 Bloomberg article (search for "Tesla Says Model S Sedan to Be Profitable Even on Base Model."):
"Tesla Motors Inc. (TSLA), the U.S. electric carmaker backed by Daimler AG and Toyota Motor Corp., said its battery-powered sedan that goes on sale next year will be profitable even on the base model that will sell for $57,400.
That price will be the entry point after the first 1,000 “Signature Series” of its all-electric Model S sedan built next year sell for at least $20,000 more than the base model, the company said March 7. All grades of the car will make money, said J.B. Straubel, Tesla’s chief technology officer.
“We can’t sell this car at a loss,” Straubel told reporters today at Tesla’s Palo Alto, California, headquarters. “We know what the targets are, what the materials cost. Tesla is enormously more capable than we were four to five years ago.”
…The company last month said its fourth-quarter net loss widened to $51.4 million from $23.2 million a year earlier as it increased investment in the Model S.
An element helping hold down costs for the sedan that goes on sale in mid-2012 is cheaper, higher-powered lithium-ion cells specifically designed for electric vehicles, Straubel said. There may also be opportunities to get lower prices for parts and materials from its Toyota and Daimler affiliations, he said."
If you back out all R&D expense after March, 2009 (when the Model S was first revealed), Tesla still lost an average of over $100,000 each on the 2,450 Roadsters sold. You can read the proferred explanations why Tesla expected to sell profitably a larger, more luxurious vehicle with a bigger battery for less than the Roadster. It hasn't happened. Despite "cheaper, higher powered Li-ion cells," Tesla just raised the price on all versions of the Model S and EM is now hopeful a quarter in the second half of 2013 might be profitable. Why? If Tesla achieved a production rate of 400 vehicles before year end and is not demand constrained, shouldn't 1Q13 be profitable ( and it just gets better from there)?
((( You can read the proferred explanations why Tesla expected to sell profitably a larger, more luxurious vehicle with a bigger battery for less than the Roadster. )))
DING DING DING .... we have a winner. The ultra-hard fact is that a Lotus Elise retails for about $50,000 and that is fully dressed and ready to drive home with. Even if you imagine that Tesla paid the full retail prcie for Elise gliders then there was at the very least $59,000 of gross mark up for tesla to use cvonverting the car to electric drive.
And yet they never made a penny of profit while selling the Roadster.
Oh yeah ... they never came close to meeting their sales goals for the Roadster either.
Q.) What was their solution to that sales flop?
A.) They reduced production and declared the Raodster a run away success. They literally claimed the car was sold out.
Comparing the economics of the Roadster and the Model S doesn't make much sense. If the Roadster and evolutions of it were to have been the mainstay of Tesla's product line, the sophisticated battery and drivetrain probably wouldn't have been developed. How would it be possible to really separate the expenses of developing the Roadster and the Model S? They could have stuck with an AC Propulsion drivetrain. They might have stayed the type and size of the present DeLorean in Texas. Actually it would be unlikely that Tesla would ever have existed.
Tesla's essential insight remains that making the Model S a high-end, purpose-built lithium Ion electric could raise the auto state of the art. Apparently it has. The battery tech is just able to bring it off and it should get better from this point. Of course productizing and producing the cars is even more of a feat and, after delays, they seem to be bringing that off. They have to get through stages of growth, not the least of which is making money, of course. Their sales results clearly showed them that they could raise the price. They have to test the way they do sales. Etc Etc