There is a pretty good reason electric car companies have had only limited success so far. Starting a car company is tough. Just ask Elon Musk, CEO of Tesla. The electric-roadster maker lost almost $35 million this quarter.
Tesla released its financial statements, which show the company is investing heavily in research and development, while at the same time showing a drop in revenue from roadster sales. The company lost almost 8 times as much money as it did a year ago, with costs skyrocketing from $4.6 million to $34.9 million. That’s a lot of money to lose in three months, and it comes most from research and development and administrative costs. The company is growing, and that costs money. If you want to one day be a national brand, it is going to cost a lot of money.
If Tesla keeps hemmoraging money at this rate, it’d burn through its cash reserves by next summer as they have just over $96 million on hand. Then again, Musk has said the company will continue to lose money through 2012. With a $60 million investment from Toyota and and a recent $30 million infusion fromPanasoic don’t expect Tesla to just disappear. Even if they keep losing money at this rate, they still owe Toyota an electric Rav4. You have to spend money to make money, and the Model S sedan is costing a lot of money to bring to market.
I’m still waiting for the Model S sedan, because it could be a game changer. It also could be late to the party, as the big automakers are launching their own lines of electric cars in coming months. Any lead Tesla might have had will evaporate once the Volt and Leaf hit showrooms, followed by a bevy of other automakers. Tesla will be the one playing catch-up then.
Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to Hemis. You can follow his slow descent into madness at Sublime Burnout.