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Tesla struggles with delays

2012-09-26 10:51

SAN FRANCISCO, California - Battery automaker Tesla is to offer shares now that production delays have reduced revenue it expected from its first mass production sedan, the Model S, launched in June 2012.

The company is also under pressure from the US government to devise a speedier repayment schedule for the R3.8-billion loan it received from the US Energy Department, according to a regulatory filing. The company is already working under a waiver on the existing loan terms.

The pioneering company, headed by entrepreneur Elon Musk, said it would only generate between R329-million and R378-million in its third quarter, compared to the R659-million it had projected.

SUPPLIERS TO BLAME?

Tesla blamed the shortfall on problems experienced in its chain of suppliers and in ensuring production-line quality for the cars, which costs between R411 000 and R823 000.

Tesla said it had built 255 Model S units and reached a weekly production rate of 77 vehicles.

Tesla said: "The Model S is an all-new vehicle produced by new employees using new equipment. As our main focus is on quality, we have methodically increased our Model S production at a rate slower than anticipated. Our suppliers must also produce new products in sufficient quantities and quality to meet our increasing demand. Certain suppliers have experienced delays in meeting our demand and we continue to focus on supplier capabilities and constraints."

The company said it would offer 4.3-million additional shares to the public, which at the current price would raise about R1.1-billion.

According to Bloomberg news agency, Tesla has been making its government loan payments on time. The new request for speedier repayment reflected expectations that the company would become profitable ahead of schedule, according to Tesla's chief financial officer Deepak Ahuja.




DPA