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DETROIT, Michigan - Tesla founder Elon Musk said at the 2015 Detroit auto show on Tuesday (Jan 13) that battery-car company Tesla was "on track" despite sales problems in China and a delay of its Model X crossover.
The South African-born Silicon Valley inventor and automaker said the company would release the gull-winged Model X in the early second half of 2015 and intended to produce its half-millionth electric car by 2020, up from more than 30 000 in 2014.
However he added that the prospect of low fuel prices in coming years due to oil and gas reserves now being tapped by fracking was a threat to the battery-car industry.
FORTUNE FROM PAY PAL
"The need for sustainable transport is incredibly high, even in the face of declining oil prices," he said in a rare public appearance. "It becomes more urgent that automakers transition to electric and put a huge amount of effort behind electric vehicle programmes."
Musk, who made his fortune building the online payments company PayPal and has been regarded with suspicion and even derision in Detroit, would not give numbers on sales in 2014 of the $80 000-$100 000 Model S. Early in 2014 Tesla put the sales target at 35 000, later to reduce that to 33 000. Some analysts doubt that target was reached.
Musk, however, insisted that US sales had gone as planned, numbers in Europe were better than expected, but China was a disappointment.
"We're pretty happy with the number of cars that were produced and ordered," he asserted.
Model S sales in China were hit by rumours in late 2014 that owners would not be able to recharge them at home. that, Musk said, was totally untrue.
PROFIT v. EXPANSION PLANS
Tesla shares soared to give it a market value of $35-billion after going public in 2014 after producing cars for less than a decade, its output one percent of the number of cars sold by Ford, whose value is less than $60-billion. The shares' value has since fallen by nearly 33% but critics say that is far too much for a small specialty carmaker that loses money.
The company is making an operating profit but the huge costs of expanding its line and output from its Fremont, California, plant and a huge investment in a $5-billion Nevada auto battery factory, are keeping cash-flow negative.
Speaking at the Automotive News world congress in Detroit during the annual auto show, Musk said he believed Tesla would be able to launch the planned Model 3, a much more affordable small electric car, in a couple years. He also intended to increase production to 500 000 units a year by 2020; that many would make the company much more than a niche player.
By that time, too, it would be making a real profit, Musk predicted.
Critics, however, warn that Tesla faces a fresh challenge from the Chevrolet Bolt electric crossover just unveiled at the Detroit show. GM says the Bolt could hit the market in 2017 for $30 000 in the same market segment as the Model 3.
'CUTTING A JUNGLE TRAIL'
Musk said he welcomed more participants in the electric vehicle market and said Tesla was "cutting a path through the jungle to show what can be done with electric cars". Yet he warned that cheaper petrol as a result of crude oil prices halving could be a disincentive not only to customers but also for investment by large automakers.
He said fracking could potentially release 10 times the amount of oil and gas resources that the world has now, keeping fuel prices low for a very long time.
"We do have significant danger with fracking technology which I think is still at an early stage," he said.
He warned the potential damage to the climate was much greater than it was before, "increasing the need for a more environmentally friendly car".
"If we can maybe go electric sooner, that would be much better for the world."
