Elon Musk revises Tesla's sales strategy in China after dismal 4Q results
12 Feb 2015
Elon Musk, Tesla Motors' founder chief executive, is formulating a revised approach to China car sales as he tries to improve performance after dismal fourth quarter results, and to meet ambitious new sales target for 2015, Bloomberg reported.
According to projections by analysts, the electric car maker was expected to report its second-best quarter ever with earnings of 32 cents a share, excluding certain items. Instead, the company posted a loss of 13 cents a share with revenue falling short of projections by 10 per cent.
The company delivered around 1,000 fewer Model S cars than the numbers projected by analysts.
According to the company, too many cars that had rolled out by the end of the year and delivered in 2014 were hit due to holidays and weather. Even amid a production backlog equal to the projected first-quarter production, Tesla jacked up its delivery projection this year by 10 per cent to 55,000 -- 74 per cent higher than last year's total.
According to Theo O'Neill, an analyst with Ascendiant Capital Markets, the stock was down because of missed deliveries, revenue and earnings. He added, however that the miss had nothing to do with demand.
Musk said last month that sales in China had fallen in recent months due to reluctance of consumers to switch to electric vehicles due to perceptions that home charging was difficult and that public chargers were too scarce.
Meanwhile, Reuters reported Tesla rolled out a record 11,627 cars, boosting total production to 35,000 for the year. The company could only make 31,655 deliveries and added that delays would push some deliveries into the first quarter of 2015.
Sales in North America continued to remain flat, at about 17,400, or 55 per cent of the total, according to Tesla. Deliveries in Europe totaled 9,500 cars, or 30 per cent, while the rest around 4,750 - went to customers in the Asia Pacific region, including China, where sales began last April.
In a letter to shareholders, yesterday, Musk said "despite initial challenges in China, we remain convinced of the vast potential of this market."
Tesla was expecting deliveries at 55,000 cars globally in 2016, an increase of about 74 per cent.
According to Musk, Tesla was on track to start deliveries of the new Model X in the third quarter.
The company originally planned the launch of the Model X in late 2013, and had delayed the introduction at least three times.
