Tesla CEO Says Carmaker Will Be Profitable by December

Is electric car maker Tesla a "loser" company, as presidential candidate Mitt Romney charged in Wednesday's debate?

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In a blog post he wrote a few hours before the debate, Tesla CEO Elon Musk said no -- the company will in fact be profitable by the end of the year.

Musk felt journalists and analysts were reading too much into the company's forecast last week of slower manufacturing of its Model S sedan (pictured above), and says he thought the press also misinterpreted the reason why the company wanted to raise an additional $150 million.

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While the financial world interpreted the additional round of financing as a weakness, Musk claims it was done for risk reduction, and doesn't foresee the company needing to use it. He says he wanted to have that additional money in the bank in case the company needed to halt production because of a supply chain disruption -- which could be caused by a natural disaster such as a flood, fire, hurricane or earthquake.

"Tesla is actually on the verge of becoming cash flow positive and will not have to spend any of the money raised," Musk wrote in the blog post, "at least until we embark upon a major new vehicle program."

Musk says he tried to make this point in a call with investors, but added, "perhaps [I] should have emphasized that more: we expect Tesla to become cash flow positive at the end of next month."

He says the production rate was 100 vehicles in the last week of September, much faster than at the beginning of the month when production was slowed because of supply constraints. Musk admits the company produced just 359 vehicles last quarter -- missing his 500-vehicle target -- but insists the company is now on track to hit those targets in the future.

One-third of Tesla's revenue comes from a loan from the U.S. Department of Energy (DOE). But Musk says any claims that Tesla was going to delay repayment of its loan to the DOE are false. "Tesla has always made its DOE payments on time and has never asked to delay repayment ever."

According to Musk, "The DOE has simply asked if we would be willing to repay the loan early if we have excess cash." His answer to that is "unequivocally yes," adding that he planned to make a payment now that's not even due until March 2013.

What do you think? Is Tesla in dire straits, as was depicted in the presidential debate and in the financial press last week, or is the outlook as rosy as Musk said in his statement Wednesday?

Tesla S at CES

Click here to view this gallery. Photos by Curtis Joe Walker

This story originally published on Mashable here.

Source: http://news.yahoo.com/tesla-ceo-says-carmaker-profitable-december-175659928.html

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