A Model-S Failure May Bring RIMM Fate To Tesla

Boston, MA 02/15/2013 (wallstreetpr) – Nikola Tesla’s  brainchild Tesla Motors Inc (NYSE:TSLA) is faced with a potential fourth quarter loss of 57 cents per share (excluding one off items) if the new model S doesn’t work out, analysts say. The electrical vehicle maker seems to be on the verge of becoming the automotive industry’s answer to Research In Motion (NASDAQ:BBRY), in terms of innovation at the expense of  profitability.

The Palo Alto-California based company is due to announce its Q4 and F.Y. 2012 results on February 20th. Despite gross profits from operations, it has suffered operational losses since last 4 consecutive years mainly because of huge administrative an R&D cost. It is now counting on the Model-S sales for profitability. A newer Sedan Model-X crossover is also in the pipeline, due to be launched in 2014. The company’s initial target is to sell 20,000 lithium ion battery powered sedans in 2013.

The company had few incident of negative reviews from critics on its record. The most recent of such accounts after last year’s “Top Gear” lawsuit , is one personal narrative of a journalist John M. Border’s test journey on the California interstate. In his newspaper article and blog post Border literally torn apart the company’s claims over the range of the battery powered vehicles saying the car had to be “towed back” to a recharge station due to power failure.

The Model-S Sedan which Broder tested boasts of a 300 mile (483 kilometers) range  given ideal weather and a fully charged 85 kilowatt-hour battery pack.

Border’s claims received a strong refute from Elon Musk , Tesla Motors Inc (NYSE:TSLA) CEO and product architect who pointed out that Border made three errors  Border did not follow the charging protocol correctly and also drove the car beyond its speed cap in the given hot weather conditions. He also said he would disclose the car’s data logger records to the public.

Tesla Motors Inc (NYSE:TSLA)’s official website warns that range is reduced in cold weather as heating system eats away some of the battery power, but the decrease in range in a hot weather is not mentioned there. The speed cap for optimal battery level is 65 miles per hour. Border says he drove at 10 degrees Fahrenheit i.e. minus 12 Celsius.

The article “does not factually represent Tesla technology —-  designed and tested to operate well in both hot and cold climates” Musk wrote in a website post published earlier today which also details the data logs from the electric vehicle’s logging system.  Musk is wrong in accusing me of dishonest sabotage Broder mentioned in his today’s article. One of the dials said the car was “shutting down–and it did” Border wrote, in support of his initial claims. However, he does also mention he was never briefed on the protocol.

The company’s shares plunged 0.4% yesterday landing at $38.30. All in all it gained 13% over the last year as against a 7% gain in the benchmark Russell 1000 Index.

The shares of Tesla Motors Inc (NYSE:TSLA) were down 2.82% and currently trading at $37.22.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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