After month of rumors, Tesla Motors (NASDAQ:TSLA) is launching its autopilot technology in its forthcoming Model X, a crossover, and also as an option on its P85/S sedan, next September, allowing thus equipped cars to travel on the highway without any effort from the ‘human’ driver – when desired.
The Californian company is the first to offer such a feature, which not only keeps a car moving steadily and adjusting to traffic speed in a given lane, it can also change lanes without input. The technology also includes a parallel parking feature, which parks the car completely by itself, without requiring any setup from the driver as in systems now adopted by many mid and luxury range models.
But, for Tesla the path has not been driverless, turning out a bit more complicated than its CEO and founder, Elon Musk, had hoped.
During the quarterly results call on August 5, Tesla lowered its delivery targets for the rest of the year from a minimum of 55,000 vehicles to a range of 50,000 to 55,000. In 2014, the California based manufacturer delivered 35,000 cars.
Tesla said that challenges with the launch of the Model X have compromised production speed in order to maintain high quality standards, affecting deliveries of the Model S, its luxury sedan already on sale, given that there is only one assembly line at its plant in Fremont, south of San Francisco.
Musk tried to reassure investors and customers that it will be able to make between 83,000 and 93,000 cars in 2016. Nevertheless, investors on Wall Street did not like the news and shares dropped about 6% to a range between US$237-243 from US$270.
In the second quarter, Tesla saw revenues rising 24% increase of its turnover to US$955 million with orders increasing 30% in the US and as much as 50% in Europe. At the same time, its losses were deeper, touching US$181 million, three times higher than in the same period of last year. Musk attributed this to higher than expected capital costs of US$405 million over the period.
Tesla is indeed investing heavily to improve its Fremont site, which was been shut down for a week for upgrades. Then, the company is also continuing with plans to build the "gigafactory", a huge plant in Nevada costing between 4 and 5 billion dollars (half of which borne by Tesla) to make the lithium-ion batteries that power its electric vehicles. Covering an area of 930,000 square meters, it will have its own power generating wind farm.
The gigafactory should produce enough batteries to equip 500,000 vehicles a year and its launch is scheduled for the last quarter of 2017, just in time for the introduction of the Model 3, a more affordable vehicle with a price target of US$35,000 dollars – less than half the cost of a current Model S.
This significant growth has forced equally significant investments reducing Tesla’s coffers from US$1.9 billion on January 1 to US$1.15 billion on June 30, at the end of the second quarter. To finance its development, the company has a credit line of $ 500 million with five banks. The amount may be increased to 750 million if necessary – though Musk said he does not foresee a need to borrow more.
Musk expects an additional revenue of US$40 million in the fourth quarter. And US$400 to 500 million in 2016.