Tesla Says Model S Sedan to Be Profitable Even on Base Model

Tesla Motors Inc. (TSLA), the U.S. electric carmaker backed by Daimler AG (DAI) and Toyota Motor Corp. (7203), said its battery-powered sedan that goes on sale next year will be profitable even on the base model that will sell for $57,400.

That price will be the entry point after the first 1,000 “Signature Series” of its all-electric Model S sedan built next year sell for at least $20,000 more than the base model, the company said March 7. All grades of the car will make money, said J.B. Straubel, Tesla’s chief technology officer.

“We can’t sell this car at a loss,” Straubel told reporters today at Tesla’s Palo Alto, California, headquarters. “We know what the targets are, what the materials cost. Tesla is enormously more capable than we were four to five years ago.”

Tesla, named for inventor Nikola Tesla and seller of the $109,000 electric Roadster, seeks to become the leader in battery-powered cars, aided by supply agreements with Toyota and Daimler. The company last month said its fourth-quarter net loss widened to $51.4 million from $23.2 million a year earlier as it increased investment in the Model S.

An element helping hold down costs for the sedan that goes on sale in mid-2012 is cheaper, higher-powered lithium-ion cells specifically designed for electric vehicles, Straubel said. There may also be opportunities to get lower prices for parts and materials from its Toyota and Daimler affiliations, he said.

Japan Impact

For example, the Model S will use an air-conditioning system modified from that in Toyota’s Prius that’s designed for electric vehicles, Straubel said.

Tesla, also partially owned by Panasonic Corp. (6752), relies on suppliers in Japan for both lithium-ion cells for its battery packs, and some components for its vehicles.

So far there’s been no impact on Tesla’s operations from the earthquake, tsunami and nuclear power plant crisis in Japan that has temporarily halted some production there, Straubel said.

Tesla said this month it aims to build about 5,000 Model S sedans at its plant in Fremont, California, in 2012, rising to about 20,000 a year later.

The 1,000 “Signature Series” Model S cars will be able to travel as far as 300 miles per charge. The base-level Model S, which goes 160 miles per charge, is about $57,400, and a version able to go about 230 miles will be about $67,400, the company said. The prices for all the Tesla models are before a $7,500 federal tax credit.

Tesla fell 1 cent to $22.81 at 5:20 p.m. New York time on the Nasdaq Stock Market. The shares have dropped 14 percent this year.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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