Tesla Says Model S Will Be Profitable As Rumor Flies That "Alpha" Prototype is Finished

By · January 05, 2011

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Tesla Motors has been on a bit of a roller coaster recently. With their stock price jumping all over the place and a big push to get the upcoming Model S out the door, supporters and investors are now looking to Tesla to get things done and produce some real results—including becoming a profitable venture, something the company's been lacking since it was founded.

In the past, Tesla's CEO, Elon Musk, has said the only reason Tesla isn't yet profitable is that they are burning cash on development of the Model S. In that vein, J.B. Straubel, Tesla's CTO, said in a recent Bloomberg article that the Model S would be profitable even at a sales volume as low as 20,000 units per year. This was in response to the fact that Carlos Ghosn, CEO of Renault-Nissan, has said they will need 500,000 annual sales of electric cars at current battery prices between the two companies to make EVs profitably.

How can Tesla, a small startup company with nowhere near the global capacity of Renault-Nissan, make EVs profitably at such a low volume? According to Tesla it all comes down to retail sales price and battery technology. Straubel told Bloomberg that Tesla's battery technology (thousands of small lithium-ion batteries made by Panasonic and chained together inside the pack) will allow them to produce their batteries for less than Nissan, and the news organization said that in the past Tesla management has indicated that price could be as low as $200 per kWh—compare that to the roughly $400-$500 per kWh Nissan has targeted in the past. Nissan batteries are what's called Lithium Manganese Prismatic cells—meaning they are large format, about the size of a hardback book—and Nissan has been developing them for decades.

In addition the claimed battery advantage, the Model S, being a luxury vehicle, will cost a whopping $57,500 before federal incentive, whereas the LEAF costs $32,780. Sure, if you are going to sell a car for a $25,000 premium and it really only has $15,000 worth of extra luxury amenities—let's say—it gets easy to make them profitably even with the added battery costs. Even so, Straubel insisted that the batteries are the main reason why the Model S is a better vehicle. It's getting to be a bit strange how Tesla is so focused on dissing the LEAF's batteries. Recently Musk even went to so far as to say that the LEAF's batteries are "primitive."

In other Model S news, it also looks like Tesla has finally built an "alpha" prototype of the Model S. In an article over at VentureBeat it was brought to light that a commenter on an engadget post who said they were part of the Model S development team was bragging about having seen the alpha prototype in action (that comment seems to have since been deleted). If it's true, this would mean that Tesla made good on their promise to deliver a fully functional pre-production prototype by the end of 2010.


· Piper Arrow 2 (not verified) · 7 years ago

I can not wait to have a Tesla S for these reasons:
- i want to stop feeding the middle east with B$
- i want a green awesome car
- i want cities to be less noisy and ear birds

Tesla, please plan SUV's and Planes ( why not)

· · 7 years ago

If the Leaf and the Telsa S was side by side and at the same price - that has been priced for the working class, like the Leaf has been, I would buy the Telsa S. I really like the Leaf, it is a fantastic car, but I would buy the Telas S because it has a more friendly design that I would feel more comfortable being seen in driving. I don't like ugly cars - not that the Leaf is ugly - the Telsa just looks better.

· DaveVB (not verified) · 7 years ago

I have been following Tesla for around 2 years now. I am heading up to Washington DC when their new showroom opens and putting down my deposit for the Model S. There are quite a few things I feel gets missed by people from different industries when they review the company and its products (roadster & sedan) because it's a new approach to an old requirement (powering a commute/driving). When I hear a comparison to Leaf or to BYD because Warren Buffet invested in it - I get a twitch in my eye a lot of times. BTD doesn't have a single product that is anything like the model S. SO what's the comparison? (these articles are usually on financial investing because of Tesla's recent IPO). Other articles, maybe are written on green tech and compare the Chevy Volt to the Tesla cars when it's not what I feel comfortable calling an electric car! And so on and so forth.

· · 7 years ago

DaveVB, I think you're right in many ways... the problem is that Tesla themselves are always comparing their vehicles to the LEAF and the Volt so they are part of the problem. If it's truly the case that Teslas aren't comparable to LEAFs and Volts then why does Tesla always start the comparisons? They should be staying out of the fray and saying, "We are in a completely different league and our only competition is the yet-to-go-anywhere Fisker Karma." Stop ragging on other companies batteries and saying how their technology is superior because people will start to say ,"Well, why is your car $25,000 more expensive, especially if your batteries a cheaper and more superior?," and then they'll start questioning whether it really is worth $25,000 more.

· Anonymous (not verified) · 7 years ago

the leaf not ugly? its disgusting. you couldnt pay me to drive that , green or not.

· DaveVB (not verified) · 7 years ago

Yeah, you know I hate to even make this comparison but ....... it reminds me so much of the old 80's & 90's Apple v/s Windows computer battles. Sure you needed a computer but there were many who wanted a computer they loved and thus Apple had its followers (I know Windows folks - you don't have to weigh in here they're just expensive and fancy when that's not necessary). Well this car company makes me think of Apple in so many ways. High-design, form and function, great engineering and a certain "well if nobody else is going to make us salivate and follow them we're happy to lead" sort of attitude. Others will likely call it being stuck up or impractical, but I'm all for it. Green and smart doesn't have to equal "clown cars" that look and feel like the engineers ruled the day.

· · 7 years ago

Dave—and this is the beautiful side of capitalism :)

· · 7 years ago

Just finished a follow up article to this one, loads more info about the Model S—plus videos!


· Anonymous (not verified) · 7 years ago

The only thing that the Leaf and Model S have in common is they are both EV's.

Nobody here would compare the Nissan Versa to a 5 series BMW, would they? That's what you are doing when comparing the two.
Why would Tesla sell a Model S for less? It's definately not a base model car. It's a luxury brand, building a luxury car.

· · 7 years ago


As I said above, I think the comparison's are largely a result of Tesla's own marketing strategy. They are the ones who keep making comparisons between themselves and Nissan.

· MR ED (not verified) · 7 years ago

I think the comparison of the Tesla to the Leaf is ridiculous. The Leaf is a econobox The Model S is a high end luxury car that will likely go alot farther and faster than the current competition, if the Roadster is any indication. It's like comparing a Sentra to a Infiniti M56. The price difference is even larger, but I guarantee that anyone who was in the position to buy the Infiniti wouldn't consider a Sentra. Same goes for potential Tesla buyers. I hope the company can show profitability and thrive.

· · 7 years ago

Regarding Tesla's comparisons with the products by the large OEMs:
As a small startup going against behemoth centenarian manufacturers, they must keep reminding the investment community that they are different and better, else they could face the same fate as Solectria and USElectricar did in the '90's when both went out of business when the large OEMs started making EVs. Investors tend to get very scared when the big guys jump in. Small startups like Tesla need to keep reminding them that they actually are better. This is somewhat sad since it means they have to tip their hand publicly about their differentiators early enough that others could potentially copy them.
Fortunately for Tesla, the hubris within the large OEMs seems to be so strong that they are completely discounting Tesla's approaches.

· V (not verified) · 6 years ago

Changes the interior please show me a car that truly stands out. I want doors that slide up and out of the way. I want a full front 4 feet long IPAD like display. I want to move my gauges to fit my needs. I want a joystick or a steering wheel option. I want a car of 2010 not the same old crap that we have seen for the past 20+ years. There are NAS devices that I can access from the internet and pull my files off from. Why can’t we incorporate this into our cars? Let me pull my schedule off my home machine into my car. Let me communicate with my home office as easily as I can today from any other office. The technology is here but no one seems to want to embrace it. I want at least 190 HP out of my car the rest I want changes on the inside. I want them now! Give me cameras all around my car. They cost next to nothing why not utilize the cheap technology. Why do the most expensive vehicles have them and to a limited degree only? The tech is cheap lets do it. Let’s do it today!

· V (not verified) · 6 years ago

I want a car that communicates with my home. I want my lights to turn on as I reach the house. I want my GPS to track my favorite routes. I want my car to warm up in the morning minutes before I leave the house. I want my car to remind me of Birthdays and Anniversaries. I want a computer on wheels that improves my life and not just gets me from point A to point B. Everyone is paying millions to do R&D and working on future cars concepts that never see the light of day! Exec's please pull your head out of your asses and make me a car of 2010 now not 20 years from now.

· V (not verified) · 6 years ago

Ehh!!!!! No one cares!

· · 6 years ago

maybe you should just stay home and play with your computer. You're obviously too busy to be trying to drive a car.

· V (not verified) · 6 years ago

"ex-EV1 driver" I always find time to drive.

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