Electric car maker Tesla ramps up production

February 20, 2013 7:56:42 PM PST
For the last couple of weeks, electric car maker Tesla has been involved in a high-profile back-and-forth with the New York Times over the mileage of it cars.

The company reported earnings Wednesday, and got another negative review -- this time from Wall Street. Tesla's stock fell 6 percent in after-hours trading.

One of the bright spots in the earnings report was the volume of cars being churned out of Tesla's plant in Fremont. For the last few months, the company says an average of 400 cars a week have rolled off the production line.

For a company that only delivered 250 cars in its first few months of production, the recent ramp up has cost the company. But those costs are coming down.

"The amount of overtime that was required to achieve the 400 cars per week was pretty extreme, so that has improved dramatically just coming into January and February," CEO Elon Musk said during a conference call.

So far Tesla has delivered 2,400 cars to its customers. That's a bit lower than some analysts' expectations of more than 3,000. But the company says it plans to deliver more than 20,000 Model S cars this year.

And despite the recent back and forth with the New York Times over the advertised range of the Model S, Tesla says buyer demand is still strong.

"Rarely do you want to take on The New York Times. Clearly what is different here is that they had the facts to back it up," said Charles Byers, a professor of marketing and public relations at Santa Clara University.

He says any fallout from the New York Times episode likely will not be seen until Tesla's next earnings report and that the immediate response Musk may have helped protect the brand for now.

Musk disputed the Times' claims by using driving data from the car.

"As a new company with a new technology, candidly, just about all they have to sell right now is their reputation, because they're just ramping up product, so reputation is huge," Byers said.

In the Times story, a reporter wrote about getting stranded on his way to one of Tesla's superfast charging stations because he claimed the battery was affected by cold weather.

The company has installed a series of these stations between the Bay Area and Los Angeles on the West Coast and between New York and Washington D.C. on the East Coast.

Range is a subject Musk touched on during Wednesday's call. "This whole thing of 'does the car work well in the cold?' It's like yeah, it works pretty well actually, and we're going to make it work even better over time," he said.

The public editor of the New York Times has since acknowledged that the reporter's notes were not as precise as expected while driving the car.

Musk acknowledged that the battery life of the Model S drops by about 10 percent in cold weather, which is a similar drop in efficiency in gas cars.

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