As a vehicle launched in a vacuum, the Tesla Model S is an orgasmic success. Car critics love it. It's also a success from a marketing standpoint with high demand. Where the Model S is stumbling is as a manufactured product, with delays in production cutting into expected earnings.
Wasn't Elon Musk running around last week convincing the unquestioning masses of reporters that production is running smoothly? The impression Musk is giving reporters contradicts what Tesla is telling its investors in regulatory filings.
According to the company's most recent 8K, the idea that they're producing anywhere near their stated goal of 400 Model S cars a week, or have produced 400 cars total is laughable. The company says:
Certain suppliers have experienced delays in meeting our demand and we continue to focus on supplier capabilities and constraints. As of September 23, 2012, we have produced a total of 255 Model S vehicles, including 77 Model S vehicles produced during the week ended September 23, 2012.
Anyone who spent months waiting for a Roadster knows this song-and-dance.
The good news is the company has approximately 13,000 reservations for the vehicle, and perhaps the company's Supercharger system (launched just in time to distract reporters from their 8K) can spur some demand. We're certainly going to write about it (later).
The bad news is the production delay means predicted revenues of "$400 to $440 million" because of "a decrease in the number of Model S Vehicles we plan to deliver" this year. This is off significantly from their previous estimate of $560 million to $600 million.
The worse news is that they're re-re-re-amending the terms of their $465 million DOE loan, which they've taken all of, to delay $14.6 million of the $28.8 million pre-funding payment originally due in October of this year to February 15, 2013 and modify other terms.
In total, Tesla has accumulated $864.9 million in loses from the date of their founding through June 20th of this year. If the company can't ramp up production of their vehicles because of suppliers or other issues, the entire brittle structure of the company's government financing/cash flow comes into question.
It's risky, but we're also hearing from the company that they're trying to avoid past mistakes and make sure each vehicle is up to snuff before rolling out of the factory. Investing in getting it right the first time may be worth taking a production hit now. We also don't know fully what the supplier issues are.
We've reached out to Tesla for clarification, but a PR representative said they are prohibited from commenting beyond what is in the filing.