Tesla’s Shares Surge on Upbeat Outlook

Even when priced for perfection, investors still find plenty of reasons to push Tesla Motors Inc.'s stock price sharply higher.

Shares jumped 15% to $223.32 in after-hours trading after the electric car maker reported quarterly results and a 2014 outlook that exceeded analysts’ expectations. The stock had closed down 4.9% Wednesday at $193.64.

Tesla said it delivered 6,900 Model S electric cars globally in the fourth quarter and forecast that its deliveries would rise to 7,400 in the first quarter as it expands deliveries in Europe and China. The company said demand remains strong for the $70,000-and-up sedan.

Investors are jazzed because the Palo Alto, Calif., company said it would deliver 35,000 vehicles in 2014, a 55% increase from 2013. Production should rise to 1,000 cars a week, from 600 a week by the end of the year. Battery cell supply will continue to constrain production in the first half of the year and then free up in the second half, Tesla said.

Shares have surged by more than 400% from a year ago. The company has sold cars in all 50 U.S. states and has officially launched sales in China, an important growth market.

Tesla also trades at 292 times next year’s earnings, according to FactSet, a figure that skeptics worry has gone way too high and ultimately should prompt a pullback in the stock price.

Options traders were pricing in a big move for Tesla prior the company’s earnings report. The options market is pricing in expectations for a 12% move higher or lower for shares through the end of the week following the report, based on the price of an options strategy known as a straddle.

Tesla said its fourth-quarter loss shrank to $16.2 million, compared with $90 million loss a year earlier. Automotive sales rose to $610.9 million, from $294.4 million a year ago.

On an adjusted basis, Tesla earned $46 million, or 33 cents a share. Analysts polled by Thomson Reuters projected Tesla would report a fourth-quarter profit of 21 cents a share, on revenue of $683 million.

http://blogs.wsj.com/moneybeat/2014/...sharply-higher

After denying any inherent fire risk in its vehicles, Tesla Motors has announced plans to add a triple underbody shield to the Model S.

The battery pack -- placed on the underside of the car -- is currently protected by a quarter inch of aluminum armor plating. New builds will also integrate a hollow aluminum bar in front of the battery housing, forcing hard objects to deflect up and pierce the plastic aeroshield and front trunk liner instead of damaging the battery.

The aluminum bar is followed by a titanium plate that is designed to prevent front underbody components from being damaged. Compared to aluminum, the titanium plate is expected to "neutralize" road debris rather than allowing it to deform the battery plate. Any surviving objects then face a third shield placed at a shallow angle to cause the car to lift and pass over the object.

The company insists that the cars are still the safest on the road without the new additions, with a 1-in-8,000 fire risk that is claimed to be five times lower than an average gasoline car.

"Nonetheless, we felt it was important to bring this risk down to virtually zero to give Model S owners complete peace of mind," said CEO Elon Musk in a blog post. "With a track record of zero deaths or serious, permanent injuries since our vehicles went into production six years ago, there is no safer car on the road than a Tesla. The addition of the underbody shields simply takes it a step further."

The executive suggests such technology would help prevent fires in extreme scenarios, such as the crash in Mexico that was widely reported. Musk suggests the vehicle was going approximately 110 mph when it impacted a roundabout and sheared off 15 feet of concrete, tore off a front wheel, smashed through another wall and crashed into a tree.

"The driver stepped out and walked away with no permanent injuries and a fire, again limited to the front section of the vehicle, started several minutes later," Musk said. "The underbody shields will help prevent a fire even in such a scenario."

The additional components are said to reduce range by just 0.1 percent and have no negative effect on handling or ride quality.

Tesla also promises to retrofit any existing Model S sedans at no charge if customers would like to have the additional safety features.

Researchers have raised new concerns that vehicle security systems may be vulnerable to hackers. Tesla's Model S sedan was singled out as being particular susceptible to security attacks.

Nitesh Dhanjani, a security researcher, revealed at a recent hacker conference in Singapore that most vehicle security systems can be compromised by using basic computer hacking techniques.

Dhanjani specifically cited the Tesla Model S, which only requires a six-character password to gain access to an online account that can lock and unlock the vehicle's doors remotely, among other things. Moreover, Dhanjani discovered that Tesla's online interface didn't have a cap for incorrect passwords, making it vulnerable to so-called "brute-force attacks," which enter thousands of passwords per second until the correct code is discovered.

Since Dhanjani's speech, Tesla has implemented a new system that locks a user out after five incorrect passwords are entered.

"We can't attempt to secure our vehicles the way we have attempted to secure our workstations at home," Dhanjani, who advises companies on computer security, wrote in a blog post. "The implications to physical security and privacy in this context have raised stakes to the next level."

Although Dhanjani's work has focused on Tesla (he owns a Model S), a number of other modern vehicles also suffer from the same pitfalls. Mainstream automakers like Ford and Toyota now offer apps to control vehicle functions, which could open the door, quite literally, for a new era of crime.

"We now have ways of accessing our cars we never did before, and consumers aren't quite aware of that. Hackers will try to take advantage of that lack of awareness," Erik Cabetas, managing partner at the consulting firm Include Security, told CNNMoney.

Some are also concerned that hackers could gain access to steering and throttle controls, which are also operated via computers in modern vehicles.

Tesla Motors [NSDQ:TSLA] CEO Elon Musk’s big announcement regarding the “D” has, as we suspected, turned out to be a new dual-motor option for the Model S that provides it with the extra traction of all-wheel drive. And the “something else” Musk also hinted at previously is a new semi-autonomous system dubbed an Autopilot. The system offers a few basic functions at present but it’s upgradable—via software updates—and will offer greater functionality in the future.

But getting back to the dual-motor option, it essentially adds a second electric motor to power the front wheels of the Model S and is being offered across the lineup, meaning a 60D, 85D and high-performance P85D. The 60D and 85D feature identical motors front and rear to give a combined output of 376 horsepower. The P85D’s rear motor is rated at 470 hp and the front at 221 hp, giving the car a combined output of 691 hp!

Incredibly, the P85D is claimed to accelerate from 0-60 mph in just 3.2 seconds, rivaling the times of many supercars and outmatching virtually all sedans on the market—including perhaps the world's most powerful sedan, the 707-hp 2015 Dodge Charger SRT Hellcat.

The dual-motor option also increases the driving range of the Model S by about 10 miles versus the current single-motor, rear-wheel-drive models, allowing the 60D to travel about 225 miles at an average 65 mph, the 85D about 295 miles and the P85D about 275 miles. This is due to efficiencies designed into the new system, according to Tesla.

Deliveries of the dual-motor, all-wheel-drive Model S sedans will begin in February, 2015. The cost of the dual-motor option for the 60D and 85D is just $4,000 but for the P85D you’re looking at $14,600, bringing the price tag up to $120,170. Of course, you’re getting supercar performance in a sedan that can seat up to seven.

As for the Autopilot system, it relies on a forward looking camera, radar, and 360-degree ultrasonic sensors that have recently been added to the Model S and actively monitor the surrounding roadway (they can’t be fitted to older models, unfortunately). Progressive software updates over time will enable sophisticated convenience and safety features that use these sensors to respond to real world conditions. These features will ultimately give Model S self-driving capability on the highway from on-ramp to off-ramp, though there’s been no mention of a timeframe for this. It should be noted that rival automaker Mercedes-Benz already offers such technology.

What the Autopilot system can do at present is read speed-limit signs and adjust the car to the speed on the sign. It can also change lanes when the driver uses the turn signal. Yes, when highway driving, all you have to do is select left or right and the Model S with Autopilot will check for a free spot and slide over. We also hear that the system will be able to automatically park the Model S.

The Autopilot system is included with a Tech Package that costs $4,250.

Tesla’s Insane Mode apparently wasn’t crazy enough.

The electric-vehicle maker, channeling one of the more absurd moments of the Mel Brooks comedy “Spaceballs,” announced an upgrade to its high-performance Model S P85D that cuts its zero-to-60 time to a face-stretching 2.8 seconds -- an option Tesla is calling “Ludicrous Mode.”

That compares with the now-seemingly leisurely time of 3.2 seconds for the current model’s "Insane Mode" setting.

“Nobody was asking for Ludicrous Mode because it was too ludicrous,” Tesla CEO Elon Musk told reporters on a conference call today. “Insane Mode has been incredibly well-received. We figured out from an engineering standpoint how to go beyond Insane so we figured we should release that.”

Zero to 60 mph in 2.8 seconds puts the Model S, a large sedan, in the realm of some of the fastest sports cars on the road today: It’s faster than Porsche’s top-end 911 Turbo S, which needs 2.9 seconds to hit the same speed.

Tesla also announced two additional Model S variants: a new rear-wheel-drive base model called the 70, which will start at $70,000 before any incentives, and a longer-range 90 model that uses a 90 kWh battery for about 300 miles of highway range on a single charge. For current owners, the upgrade from the 85 kWh battery pack would cost $3,000.

SAN FRANCISCO -- Tesla Motors Inc., testing the power of viral marketing to sell its electric cars, said today that it will offer a word-of-mouth discount on the Model S sedan through the end of October, with both referrer and buyer getting $1,000.

The timing of the discount program, which will begin as Tesla prepares to start up an assembly line for its new Model X crossover, also suggests a desire to maintain the sales pace for the Model S. Palo Alto, Calif.-based Tesla has set a goal of delivering 55,000 units combined of the Model S and Model X in 2015.

Speaking to reporters today, Tesla CEO Elon Musk characterized the referral program as a test of an approach that could ultimately cut the cost of opening retail stores around the country. He said it currently costs Tesla about $2,000 to sell a car through one of its showrooms, but word of mouth could lower that.

“This is a short-term experiment,” Musk said during the conference call. “We’re trying to inform a long-term strategic decision here.”


Elon Musk: "This is a guerrilla tactic against car dealers in certain states. I don't want to characterize that as the main reason, but it could be something that helps us."

Under the program, customers will be able to buy a new Model S online by clicking a link from a current Tesla owner. The buyer will get a $1,000 discount, while the Tesla owner who provided the link will get a $1,000 credit toward vehicle service, Tesla gear or the purchase of another vehicle in the future.

Tesla said the owners whose links are used the most will win prizes, including a tour of the company’s new battery “gigafactory” in Nevada and the opportunity to buy a limited-edition “Founder Series” of the Model X at a $25,000 discount.

Tesla plans to begin delivery of the Model X this fall.

Musk said the referral program may also prove useful at helping Tesla with word of mouth in states where a requirement for franchised dealers has prevented the company from opening showrooms.

“Tesla representatives are not allowed to sell in certain states,” he said. “Customers, who are not salespeople, can refer their friends -- there’s no rule against that. And so, this is a guerrilla tactic against car dealers in certain states. I don’t want to characterize that as the main reason, but it could be something that helps us.”

The all-wheel-drive Tesla Model S P85D sedan performed better in our tests than any other car ever has, breaking the Consumer Reports Ratings system.

The P85D is brutally quick, with instant acceleration. The car’s thrust is forceful and immediate. Its near-instant g-forces can otherwise be achieved only by leaping off a building—literally.

That this electric car accelerates from 0 to 60 mph in 3.5 seconds without an engine’s roar makes it frighteningly eerie in its silent velocity. It’s so explosively quick that Tesla has created an “insane” driving mode.

With a six-figure price tag, the P85D is expensive, meaning its virtues will be experienced by a rare few. But its significance as a breakthrough model that is pushing the boundaries of both performance and fuel-efficiency is dramatic (even more so because it is coming from the factory of an American startup company). The Model S precedes additional electric cars coming from Tesla Motors. The Model X crossover is due to arrive in 2016, followed in 2018 by a more attainable compact sedan, named Model 3, targeted to start at about $35,000.

The P85D also has better braking and handling than our top-scoring standard Model S. And yet it’s more energy-efficient, getting the equivalent of 87 mpg.

Despite its sharper focus on performance, the P85D also maintains its practicality and luxury.

In rating it, however, we faced a quandary: The Tesla initially scored 103 in the Consumer Reports‘ Ratings system, which by definition doesn’t go past 100. The car set a new benchmark, so we had to make changes to our scoring to account for it. Those changes didn’t affect the scores of other cars.

To be clear, the Tesla’s 100 score doesn’t make the P85D a perfect car—even at $127,820. It has imperfections. The interior materials aren’t as opulent as other high-ticket automobiles, and its ride is firmer and louder than our base Model S.

What’s more, a lengthy road trip in an electric car with a 200-plus mile range can be a logistical hurdle if a quick-charging station isn’t along your route.

It’s also important to note that our Rating doesn’t include the Tesla’s reliability. The Model S has average reliability, according to our owner-survey responses.

That said, the Tesla Model S P85D is an automotive milepost. It’s a remarkable car that paves a new, unorthodox course, and it’s a powerful statement of American startup ingenuity.

Consumer Reports yanks recommendation for Tesla Model S

October 20, 2015

Consumer Reports withdrew its recommendation for the Tesla Model S – a car the magazine has previously raved about – because of poor reliability for the sporty electric sedan.

The turnabout comes after the influential consumer magazine handed the luxury car a “worse-than-average” rating in its annual report on the predicted reliability of new vehicles issued Tuesday.

Consumer Reports surveyed 1,400 Model S owners “who chronicled an array of detailed and complicated maladies” with the drivetrain, power equipment, charging equipment and giant iPad-like center console. They also complained about body and sunroof squeaks, rattles and leaks.

“As the older vehicles are getting up on miles we are seeing some where the electric motor needs to be replaced and the onboard charging system won’t charge the battery,” said Jake Fisher, Consumer Reports’ director of automotive testing. “On the newer vehicles we are seeing problems such as the sunroof not operating properly. Door handles continue to be an issue.”

Fisher said the flaws could signal future problems for the brand, which plans to roughly double production next year. It has just begun deliveries of a second vehicle, the Model X electric crossover, and intends to introduce the Model 3, a smaller, less expensive electric car, in 2017.

“Going forward this poses the question whether they will be able to keep quality up as they increase volume and add models to the mix,” he said.

The risk is significant because the vehicles are becoming more complex, he said. For example, a signature feature of the Model X are “Falcon Wing” doors that swing out and fold up. Fisher asked how reliable those will be if Tesla is already having trouble with door handles.

Tesla spokesman Ricardo Reyes said the Palo Alto automaker keeps in close communication with its customers to “proactively address issues, and quickly fix problems.”

He noted that over-the-air software updates allow Tesla to diagnose and fix most bugs without the need to come in for service.

“In instances when hardware needs to be fixed, we strive to make it painless,” Reyes said. “Consumer Reports also found that customers rate Tesla service as the best in the world.”

Consumer Reports slammed Tesla’s Model S on reliability even though it loves the way the car drives.

Just last month the magazine awarded one version of the car – the all-wheel-drive Tesla Model S P85D – 103 points, a tally so high it broke the Consumer Reports road test ratings system. Its driving performance was better than any other car vehicle the magazine has evaluated.

But Fisher said road-test scores are based on the performance, comfort and road manners of the cars Consumer Reports buys and evaluates.

They are separate from CR's new-car predicted-reliability scores. A great-performing vehicle still might be a service nightmare while an uninspiring, appliance-like model could be trouble-free.

While Consumer Reports graded the Model S, it didn’t officially include Tesla in its annual ranking of 28 auto brands because until last month the car company had only one vehicle in the market.

But if it were scored as a brand, the automaker would have placed 19th between Acura and GMC, Consumer Reports said.

Lexus was the top brand for reliability. The rankings of the other brands with better-than-average reliability are second-place Toyota followed by Audi, Mazda, Subaru, Kia and Buick.

Brands with average reliability are Honda followed by Hyundai, Mini, BMW, Volvo, Volkswagen, Porsche and Nissan.

Those that were least reliable are Lincoln followed by Ford, Acura, GMC, Chevrolet, Mercedes-Benz, Chrysler, Dodge, Infiniti and Cadillac.

The worst of the bunch were Ram followed by Jeep and Fiat.

The 2015 Annual Auto Reliability Survey relied on data from more than 740,000 vehicles.

“We’ve seen a number of brands struggle with new transmission technology,” Fisher said, including systems such as a dual-clutch gearbox, a continuously variable transmission and transmissions with eight or nine speeds.

But some manufacturers are getting it right. Audi and BMW have reliable dual-clutch transmissions, while the CVTs in Honda and Toyota hybrids have been strong performers.

Lexus collected top reliability marks for all seven vehicle lines scored in the Consumer Reports survey. Buick was the only domestic brand in the top 10 coming in seventh place. Fiat-Chrysler products were the worst, taking five of the seven bottom spots.