FREMONT, Calif. (KGO) --An aggressive expansion plan appears to be taking a toll on earnings at electric car maker Tesla. The Palo Alto company said it lost almost $50 million in the past quarter, but it could just be growing pains.
Demand for the Tesla Model S sedan is expanding globally into China and soon into the United Kingdom, Japan and Hong Kong. CEO Elon Musk says he expects demand will be even greater for the Model X Crossover coming next year.
Tesla has plenty to crow about. Orders flow in faster than the Fremont plant can produce them. Yet buyers in China -- anxious to drive a prestigious and zero emissions car -- recently expressed frustration over delays in delivery, but the company is gearing up to expand production. It had a huge turnout last Saturday for a job fair. And there are plans for a new battery manufacturing facility.
Tesla says it will spend $850 million on that. Investors may be worried about how that will impact earnings and sales numbers, especially if demand continues to outstrip supply.
Whatever the future, Tesla is having a positive impact on Fremont -- a city that only four years ago was worried about the loss of 5,000 high-paying NUMMI jobs. Two miles from Tesla sits the commercial area of Fremont's Irvington District. The manager of Red Wing Shoes on Fremont Boulevard says Tesla supports local businesses.
"They came into us actually, and a couple of people the first turnover they came in, and that's kind of been one department after another until we've gotten a really good relationship going, supplying the majority of the shoes over there," said Chris McAndrew, the Red Wing Shoes store manager.
Tesla covers $70 for safety work boots and shoes. That's about 50 percent of the cost.
And directly across from Tesla sits Taqueria Las Vegas, a family-owned restaurant that saw a dip when NUMMI shut down, but business has bounced back.
"There are new companies over here in this area, plus Tesla. Tesla is a big part. We are [doing] better," said Abel Martinez, the Taqueria Las Vegas restaurant owner.
Some of NUMMI's old suppliers faded away, but others have developed relationships with Tesla, such as Inland Metal, Plastikon, and Scandic Springs.
Tesla says development of its Model X SUV is well underway, but it's not saying anything yet about a lower cost sedan.