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Tesla Motors, Inc. Message Board

  • bluecheese4u bluecheese4u Feb 20, 2013 8:19 PM Flag

    Tesla Motors, Inc. – Fourth Quarter & Full Year 2012 Shareholder Letter

    Tesla Motors, Inc. – Fourth Quarter & Full Year 2012 Shareholder Letter

     Achieved 20,000 annualized production rate
     Record new Model S reservations
     Model S unanimously named Motor Trend Car of the Year®
     Q4 revenue increases sequentially by 500% to $306 million
     Rapid growth of Model S sales and service network
     First profit now expected Q1 2013 versus prior guidance of late 2013

    February 20, 2013

    Dear Fellow Shareholders:
    We started 2012 with a few Model S prototypes in hand and the goal of going from producing hundreds of Roadsters per year to producing hundreds of Model S vehicles per week. During the year, we successfully completed homologation of the car, started initial deliveries on time in June and ramped the production rate to our year-end target of 400 vehicles per week. Along the way, Model S picked up almost every major automobile award, including the first ever unanimous designation as the Motor Trend Car of the Year®. Tesla powered cars have now been driven more than 40 million miles.
    With our production now reliably at an annualized rate of 20,000 units per year and thousands of Model S vehicles on the road, our plan for 2013 is to introduce Model S to customers around the world. Many of our reservation holders and potential customers have yet to experience Model S. That will change this year, with our growing network of stores and galleries, service locations and Supercharger sites, along with first deliveries in Europe and Asia scheduled for later this year.
    We will also continue to implement production and delivery efficiencies throughout the year. We have already made significant progress this quarter. As a result, we expect to be slightly profitable (excluding only non-cash option and warrant-related expenses) in Q1 2013.
    Achieved 2013 Production Rate Goals
    Our most significant achievement in Q4 was the successful ramp of production volume to more than 400 vehicles per week for three consecutive weeks in December, and this has continued at a consistent rate in Q1. This has established a production level that will allow us to achieve our goal of 20,000 Model S deliveries in 2013. We produced over 2,750 vehicles during the quarter and more than 3,100 vehicles during the full year, while maintaining our stringent quality standards.
    To quadruple the pace of production during the quarter, we dramatically improved our manufacturing processes, and made significant strides in improving initial end-of-line quality. We were also able to overcome many of our past supply chain challenges and methodically stabilized the supplier base.
    In the quarter, we also began to scale our delivery strategies. Both personal home delivery and factory pick-up were very popular delivery options for customers. However, we faced some challenges scheduling deliveries near the end of Q4 as our peak production coincided with vacations during the holiday season. As a result, we delivered approximately 2,400 Model S vehicles during the quarter and about 2,650 for the year. We have improved the delivery process in Q1 of 2013, and will continue to make enhancements to the process throughout the year.
    Growing Model S Demand
    New reservation activity once again hit record levels during the quarter driven by holiday traffic to our stores, multiple Car-of-the-Year awards, the start of European marketing, and visibility of customer cars on the road and related word-of-mouth enthusiasm. As a result, we added more than 6,000 new reservations in Q4, up from almost 2,900 in Q3. During the quarter, we also announced a U.S. price increase for new reservations made after December 31st.
    We invited a large number of reservation holders to configure their cars during the quarter. Converting these reservations to firm, non-refundable orders increased cancellations, as expected. After deliveries and cancellations, our net reservations at year end, were over 15,000, up from about 13,000 at the end of Q3. New reservations continue at a steady, although slower pace in Q1 2013, as compared to December, due in part to the pull ahead of reservations into Q4 by customers seeking to avoid the price increase. Q1 cancellations are likely to remain elevated as the remaining older reservation holders are invited to configure their vehicles within a set timeframe or pay the higher price just like new reservation holders.


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