Isra-Mart srl:Tesla boss predicts early profitability for Model S

www.isra-mart.com

Isra-Mart srl news:

Tesla's chief executive Elon Musk yesterday revealed that he expects the company's new Model S electric car to be profitable by 2013, just months after it starts production, dismissing concerns over last year's ballooning losses.

Musk told the Clean Tech Forum in San Francisco that although the high-profile electric car manufacturer was focused on creating new markets, it was still "a real business" capable of delivering long-term returns. Deals to supply 1,800 sets of battery packs and chargers for Daimler's Smart fortwo, a development programme for the Mercedes A-Class, and the powertrain system for Toyota's RAV4 proved that the company's products were already in great demand, he said.

"Our plate is full. We could do more deals but we're trying to grow as fast as we can without being stupid," he said. "When the Model S is in production, I am confident it will be profitable. I can't figure out how to grow a company's production by 30 times while remaining profitable. There may be people who can do that but I can't."

The California-based firm has already received orders for 3,700 Model S cars, the company's first electric sedan which has a range of 300 miles.

Musk said that Tesla plans to make 20,000 Model S cars a year and will start selling the vehicles in the second half of 2012, adding that by 2013 the company would be in profit.

Although Tesla's revenues increased slightly last year, the company reported net losses of $154.3m, compared with $55.7m in 2009. But the company has seen a surge in investor confidence over the past year with a $30m investment from Panasonic and $226.1 million raised in an initial public offering.

Musk also told the conference that utility companies in California did not yet need to be concerned with additional power demands resulting from the take-up of EVs.

Last month, a report from Pike Research predicted an annual plug-in electric vehicle (PEV) market in the United States of about 359,000 vehicles by 2017 and said that utilities in California and New York should prepare for the arrival of PEVs in much larger numbers than their counterparts in other regions.

But Musk downplayed the short-term impact of EVs on the grid. "You would have to replace some 70 per cent of asphalt miles with EV before having to change the grid provided that the cars are charged at night," he explained. "In terms of utility load we're a long way from seeing electric cars having any kind of impact on the grid. Until we approach one per cent of EVs on the road, we shouldn't spend much time thinking about the problem."

Although increased load is not of immediate concern, American utility companies are currently planning for changing patterns in energy distribution, said Matt Lecar, principal at General Electric's Smart Grid Centre of Excellence, adding that the current "dumb grid" may not cope if the majority of consumers charge their EVs overnight.

"With EVs you're flattening the night-time load profile over the 24 hours a day, using more expensive resources or dirtier resources, such as coal," he said. "There are typically five to eight homes served by one residential pole top transformer so the addition of two electric vehicles could easily overtax that pole top transformer if they are happening at the same time with other load."

He also said that Pacific Gas & Electric, California's largest utility, faces an especially taxing problem because the early adopters of EVs tend to live in areas of California that are least equipped to handle greater loads at peak times.

For example, he said that Berkeley in San Francisco's East Bay was equipped to deal with smaller loads than the Central Valley where air conditioning is more common.

Smart grid plans will have to develop rapidly alongside EVs to cope with the changing demand patterns, he said. "As utilities forecast future reliability, they definitely look at smart grid as a catalyst for their EV programme," he added.

Saul Zambrano, director of integrated demand side management product portfolio at PG&E, said the company was preparing for the anticipated rollout of EVs. "We have created a market readiness programme with GM and Nissan so we know where the extra load is going to be," he said. "We're already mapping with GIS where their customers are so we know if we need to upgrade the transformer or bring in a secondary line. We've been doing this for 100 years."