For Tesla Motors, its biggest hurdle to overcome in 2014 will be in readying its Fremont factory for production of the Model X.

Model X

Model X

As part of the gear up for Model X production, Tesla will have to outlay a significant amount of money.  As Tesla sees it, spending will increase "significantly" this year as production speeds up and the automaker readies for the Model X launch.

Tesla CEO Elon Musk says this of Model X assembly/production:

"We do need a new final assembly line, which we hope to transfer to in the third quarter or thereabouts.  Also there's a new assembly facility ... where the Model X is built."

"The car business is truly staggeringly big—$2 trillion in new-car sales.  It's a pretty big ramp ahead in terms of reinvestment."

Tesla has the necessary funds on hand, even before their recent successful $2 billion dollar convertible bond offering, but spending loads of cash will most likely result in higher net losses this year.

Model X

Model X

If Tesla pulls it off (gets the Model X out on time and ramps production up at a reasonable pace), then the reward could be significant.

Tesla says that the Model X is selling itself already, despite the automaker not yet marketing it.  Musk says there's strong demand for the Model X, but he declined to provide an exact figure for pre-orders (reservations). However, Musk believes that Model X demand will exceed demand for the Model S.  We suspect that Musk is accurate in this regard, at least as it applies here in the US where SUVs/crossovers are the preferred mode of transport.

Quoting Musk in regards to Model X demand:

"The fish are jumping in the boat. We're actually not trying to sell the Model X at all, and we're seeing a steady accumulation of deposits."

For Tesla, the simultaneous production of 2 vehicles will be something the automaker has zero experience with.  Our hope is that Tesla Motors succeeds in adding a second model to its lineup.

Source: Automotive News