Tesla Motors (TSLA) In The News

by Sean Patterson | Wednesday, Sep 26, 2012 | 656 views

Tesla Motors, Inc. (NASDAQ:TSLA) has been generating a lot of press lately. First, as we reported late last week, the company announced that it would greatly increase its retail presence this fall. On Monday, Tesla released details of its new “Supercharger network”. Then much less flamboyantly, on Tuesday Tesla filed a Form 8-K with the SEC detailing amendments to its loan agreement with the Department of Energy (DOE) and plans to sell more stock. The separate SEC Form S3A SR related to the stock offering disclosed that Tesla has significantly reduced revenue expectations for 2012.

The six Supercharger locations announced Monday are only the beginning of a planned nationwide rollout. The charging stations will be solar powered, requiring almost no external energy after installation. The Superchargers, which the company claims are “substantially more powerful than any charging technology to date” will allow Tesla Model S owners to drive for around three hours at sixty miles per hour after each charge – and recharge at no cost in about half an hour.

The amendment to the debt agreement requires a faster repayment of principal in exchange for a waiver on some existing terms. Whether or not this will have an adverse effect on Tesla depends on its financial results, the success of the stock offering and even politics given the hostility to green technology by some lawmakers.

The company attributes lowered 2012 revenue expectations to a slower than expected increase in production capacity, not a shortage of orders. Reasons given include the company’s transition to high-volume production (a process which not atypically experiences short-term setbacks), some suppliers not meeting Tesla’s demand and a commitment to quality that won’t be sacrificed for too-fast production ramp ups.

While Tesla’s stock price fell almost 10% Tuesday, it’s hard to see how this week’s news has fundamentally changed the outlook for Tesla. Tesla is undergoing a dramatic change from niche manufacturer to high-volume producer. The probability is that risks associated with this change, and the impact that external factors like the price of oil or actions by much bigger competitors, will have a much bigger influence on Tesla’s future than the events described in this article.

Currently Tesla claims to have 13,000 reservations for its Model S, compared to projected deliveries of 20,000 for all of 2013. This has been achieved with virtually no marketing. Compared to its long-term business plan, it appears Tesla is on track.

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