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