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Musk: solving electric cars as easy as firing one into space

CEO Elon Musk, introducing the Tesla Semi in November. Photo: Veronique DuPont / AFP / Getty Images

Tesla today reported record losses for the fourth quarter on the glitch-riddled ramp-up of its much-promoted mainstream Model 3 electric car, but said annual revenue grew by 55% in 2017, and suggested that its main problems will be resolved in the coming weeks.

Driving the news: CEO Elon Musk spent much of an hour-long call with analysts explaining why his flagship Model 3 is so far behind production targets, and vowing to get back on track. Relying on humor and a bit of braggadocio, he suggested that he had what he called "deeper hell than we expected" under control.

Be smart: Forget the losses ($2.2 billion in all for 2017), and the revenue ($11.8 billion) as well. All that matters for Tesla is delivering the Model 3 at scale some time this year, meaning somewhere approaching 10,000 cars a week. As long as Musk can more or less achieve that, the repetitive black eyes and smack talk he has suffered will be forgotten.

A day after the launch of the Falcon Heavy rocket by Tesla's sister company SpaceX, Musk quipped, "If we can send a Roadster to the asteroid belt, we can probably solve Model 3 production. It's just a matter of time."

Other detail:

  • Competitive advantage: Musk said Tesla's chief advantage over rivals won't be cool cars or in-vehicle technology, but efficient manufacturing. "We're going to productize the factory," he said. He said that the Model T's advantage, for instance, was not quality, but Henry Ford's creation of the assembly line at River Rouge in Michigan.
  • Battery bottleneck: Musk said the chief Model 3 bottleneck has been production of lithium-ion battery modules. When production began, he said, two of four battery production zones "flat out didn't work." In Germany, Tesla has redesigned the equipment, which he said will reach the U.S. next month for installation at the company's Gigafactory in Nevada.
  • Self-driving: A Goldman Sachs analyst asked why Musk diverges from virtually every other carmaker making autonomous vehicles by relying solely on radar, cameras and ultrasonic sensors, and eschewing Lidar. Musk said those using Lidar would end up with expensive equipment that "can't read signs," and ultimately would not fully work. "Perhaps I am wrong, in which case I'll look like a fool. But I'm quite certain I'm not wrong," he said.

Tesla's shares were up 3.3% today prior to the release of 2017 results.

This story has been updated.

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