US electric vehicle and battery storage maker Tesla has delivered an optimistic earnings call for Q4 2015, with the suggestion that the super-charged company could turn a profit in 2016, and describing its Model X as the “best car ever.”
The Model X – Tesla’s all-wheel drive offering with a range of more than 400km (257 miles) is billed by the company as “the safest, fastest and most capable sport utility vehicle in history.” And, of course, is also “ludicrously fast,” able to accelerate from zero to 100km/h in 3.2 seconds.
But it hasn’t been fast off the production line. And in a conference call with Tesla executives on Wednesday (via Seeking Alpha), reporters and analysts were keen to get an update on the progress of the SUV, which has so far been drip fed to consumers due to manufacture constraints and design rejigs.
On top of this, the company delivered its 11th quarterly net loss and its shares have had what MarketWatch describes as “a rough year so far,” with the stock down nearly 40 per cent, and 33 per cent in the past three months.
But Tesla CEO and founder Elon Musk, who conceded the last several months had been “quite excruciating” – said he felt “very good about things right now. …I think we’re through the worst of it at this point.”
“Something I’m personally quite excited about is that we expect to be positive cash flow starting next month and then continuing on into Q2 and beyond,” he said.
“And then we’re expecting to be profitable for 2016 on a non-GAAP basis. And I personally think that that is actually the correct way to think, to look at it, because of the way that GAAP treats lease accounting. But nonetheless, despite the lease accounting stuff, we anticipate it being profitable by GAAP standards in Q4 of this year.
On the Model X, Musk said the company was learning from its mistakes: “I think the mistake we made with the Model X, which I really think we’ve taken to heart at Tesla, is that we put too many new features and technologies, too many great things all at once, into a product,” he said.
“In retrospect, it would have been a better decision to do fewer things with the first version of Model X, and then roll in the capabilities and features on new technologies over time.
“…The net result, however, is that I think the Model X is an amazing car. I honestly think it’s probably the best – I mean, I think it’s the best car ever. I’m not sure anyone’s going to make a car like this again. I’m not sure Tesla would make a car like this again.”
This is a big call, considering the company’s high end all-electric sedan, the Model S, has won countless automotive accolades. As Musk points out, the Model S was the best-selling premium sedan – of any kind – in the US in 2015, its sales increasing by 51 per cent, compared to an overall market decline of about 1 per cent.
The company also has a mass-market offering – the Model 3 – in the works, which we learned this week could cost as little as $25,000 in the US, once tax credits are applied.
On the Tesla Energy front, the company’s Nevada Gigafactory is now producing Powerwall and Powerpack batteries – the first delivery of the residential-sized Powerwalls arrived on Australian shores at the end of last month.
Indeed, Tesla says its energy business achieved a “positive gross margin” in Q4 2015, and is expected to be a lead generator for the firm, with its battery products delivering more than double the amount of potential customer inquiries than its automotive business.
Tesla plans to supply 15GWh of stationary battery storage from its 35GWh Gigafactory, once the facility is fully ramped in 2020.
“Production is in on track and we feel really, really good about that,” said chief technical officer Jeffrey Straubel. “We’re starting shipments of Powerwalls and Powerpacks worldwide, and we’re growing out the sales operations and sales teams around the world.”