Tesla posts wider loss, highlights energy storage demand

7 May 2015 | Author: | No comments yet »

Elon Musk: Demand for Tesla’s home battery is ‘crazy off the hook’.

(Reuters) – Tesla Motors Inc (TSLA.O) reported a wider first-quarter net loss on Wednesday, but outperformed expectations and stuck to key milestones for the year ahead, despite pressure on margins. Though Apple, with its huge cash reserves, could have a huge impact on the market for advanced cars, Musk has repeatedly encouraged other automakers to enter the race for electric cars.

DETROIT — Tesla Motors is acquiring a Grand Rapids-based auto supplier, giving the Silicon Valley technology company a physical presence in Michigan, the Free Press has learned.Demand for Tesla’s energy storage batteries are so high that the company’s Nevada gigafactory could dedicate all of its production to the home and utility products, CEO Elon Musk says.Electric car maker Tesla Motors delivered a quarterly record of 10,045 cars in the first quarter, helping it beat Wall Street’s expectations despite costly investments in new products and factory capacity and the impact of the strong dollar. Chief Executive Officer Elon Musk said during a conference call that demand for the company’s new line of stationary energy storage systems, unveiled last week, is “off the hook.” Tesla said in a letter to shareholders on Wednesday that “total addressable market size for Tesla Energy products is enormous and much easier to scale globally than vehicle sales.” Tesla’s cash reserves fell to $1.5 billion as of March 31 from $1.9 billion at the end of 2014. Tesla reached a deal to acquire Riviera Tool, marking the first acquisition for the burgeoning electric-vehicle and battery manufacturer, said a person familiar with the matter.

The company said it plans a total of $1.5 billion in capital spending this year, much of it to buy production tools for the Model X, complete its large battery “gigafactory” in Nevada, and for other facilities. He called the 38,000 pre-orders “crazy off the hook” while acknowledging that his company’s production can’t keep up. “There’s like no way we could possibly satisfy demand this year,” Musk told analysts Wednesday during its first-quarter earnings call. “We’re basically sold out through the middle of next year.” Musk is making good on his promise to revolutionize the auto industry with his electric carmaking upstart. Tesla reported an adjusted net loss of 36 cents a share in the latest quarter, excluding certain expenses, compared with a profit of 14 cents a share on the same basis a year ago. Tesla is expected to retain those workers and eventually rename the operation Tesla Tool & Die, said the source who is not authorized to speak publicly about the transaction.

The investment in Michigan gives Tesla a manufacturing footprint in the home state of the Detroit Three automakers: General Motors, Ford and Fiat Chrysler Automobiles. The level of demand has been so large the executive team is investigating whether it should boost capacity for stationary storage battery packs at its so-called “gigafactory” currently under construction near Reno, Nev. Buffett was pressed on his 2008 prediction that the government’s intervention in the economy would create “an onslaught of inflation.” His response was that his call was “so far very wrong.” He did point out, however, it’s hard for him to understand how inflation couldn’t kick in. If there is inflation, the companies that don’t require ongoing investment are potential winners since they don’t need to buy goods at inflated prices, Stone summarized in his note to clients.

Brauer said. “Interest will be huge initially, reflecting the current market’s hunger for all things S.U.V., but if something derails the Model X’s rollout and keeps Tesla from taking full advantage of the hype and pent-up demand, it will be a missed opportunity.” Mr. He described the reservations as the equivalent of 25,000 packs because a typical utility or heavy industrial customer would require at least 10 of the packs. Musk said that Tesla’s first foray into the mass market, the smaller, more affordable Model 3, would be ready to show publicly next spring, possibly as early as March.

There is also the potential other well capitalized Silicon Valley companies such as Apple Inc (AAPL.O) or Google Inc (GOOGL.O) will move into the market. Musk said production volume will likely double in the fourth quarter as Model X ramps up, but he acknowledged that plan is optimistic. “Sometimes people don’t totally appreciate there are several thousand unique parts in a car, and if any one of them is unavailable, for any reason, you can not scale production,” he said. Tesla said it will start delivering its Model X sport utility vehicle late in the third quarter, still within the window the company promised earlier this year. At a news Grand conference in January at the Automotive News World Congress event in Detroit, Musk told reporters that he wouldn’t rule out building a plant in Michigan in the future.

Tesla executives also fielded a host of questions on Wednesday about the company’s new battery product, intended for home and business energy storage. The battery packs were unveiled in California in an event last week and are intended to help consumers and businesses manage their energy use, for example, with solar panels to store electricity for nighttime use. The company learned that lesson in 2012, when customers who bought early versions of the Model S reported issues with door handles and other problems.

Buffett said he would “never advocate running a business at a loss,” and the “same goes for excess people” since “efficiency is required over time in capitalism.” * On investing. Stocks look expensive using traditional measures, such as stock market value compared with the U.S. gross domestic product and corporate profits next to GDP. The 10 kWh home unit is designed as a source of backup power, while 7 kWh-unit can be used daily to extend the environmental and cost benefits of solar after the sun has gone down.

Musk said the company’s entire Nevada battery factory, which will open next year, could be devoted to stationary storage, but batteries for cars will be its priority for now. There are people who want to go off-grid on principle, or they just want to be independent.” However, the 7 kWh battery does make economic sense in certain markets overseas, particularly in Germany and Australia because of tariffs and the electricity-rate structures in those countries, said Tesla co-founder and Chief Technology Officer JB Straubel.

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