Elon Musk has promised he will make an "exciting" announcement tomorrow, but Tesla Motors issued two bits of news late last night to add to whatever we'll learn about on Tuesday. First off, sales of the Model S have "exceeded the target provided in the mid February shareholder letter" by 250 units. Second, sales of the low-end 40-kWh Model S were so low that the model has been scrapped.

In February, Tesla said in a shareholder letter that it expected "about 4,500 deliveries in
Q1" of 2013. It has instead sold 4,750 and it is thus "amending its Q1 guidance to full profitability, both GAAP and non-GAAP." The company is now delivering 500 vehicles a week, up from 400 not too long ago. We now have to wonder it the original estimate of 20,000 sales in 2013 will also change.

"Only four percent of customers chose the 40 kWh battery pack, which is not enough to justify production of that version."

It was just about two months ago that Tesla started delivering (what had been) the mid-level Model S, which has a 60-kWh battery. The top-of-the-line version uses an 85-kWh pack. As of this writing, the 40-kWH model remains listed on the Tesla website, but apparently, "only four percent of customers chose the 40 kWh battery pack, which is not enough to justify production of that version." What about those four percent? They will get a 60-kWh model that "will be software limited to 40 kWh. It will still have the improved acceleration and top speed of the bigger pack, so will be a better product than originally ordered, and can be upgraded to the range of the 60 kWh upon request by the original or a future owner." Originally, the 40-kWh model was supposed start deliveries in the middle of 2013.

Lastly, Tesla revealed that every 60-kWh Model S – where Supercharging was supposed to be an optional upgrade – has the Supercharging hardware built in. The company calls this a "small Easter egg" (it is based in Silicon Valley, after all) and says it "is taking a slight cost risk that ultimately all customers will want to buy the Supercharger upgrade and receive unlimited, free long distance travel for life. Even for those that never drive long distances, this will improve the resale value of their car to people that do." This means that every Model S out there will have Supercharging, and Tesla has already said all future vehicles will have the fast-charging technology as well, so it is a technology the company believes in.

So, after all this, what will Musk's big announcement be tomorrow?
Show full PR text
TESLA MODEL S SALES EXCEED TARGET

Profitability Guidance Amended Upward
40 kWh Battery Cancelled

SUNDAY, MARCH 31, 2013

Tesla Motors announced today that sales of its Model S vehicle exceeded the target provided in the mid February shareholder letter. As customers who note their Model S serial number this weekend will realize, vehicle deliveries (sales) exceeded 4,750 units vs. the 4,500 unit prior outlook. As a result, Tesla is amending its Q1 guidance to full profitability, both GAAP and non-GAAP.

"I am incredibly proud of the Tesla team for their outstanding work. There have been many car startups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution," said Elon Musk, Tesla Motors co-founder and CEO. "I would also like to thank our customers for their passionate support of the company and the car. Without them, we would not be here."

Also being announced today is that the small battery option for the Model S will not enter production, due to lack of demand. Only four percent of customers chose the 40 kWh battery pack, which is not enough to justify production of that version. Customers are voting with their wallet that they want a car that gives them the freedom to travel long distances when needed.

The customers who ordered this option will instead receive the 60 kWh pack, but range will be software limited to 40 kWh. It will still have the improved acceleration and top speed of the bigger pack, so will be a better product than originally ordered, and can be upgraded to the range of the 60 kWh upon request by the original or a future owner.

Tesla is also revealing a small Easter egg today: all 60 kWh cars have been and will be built with Supercharger hardware included. Tesla is taking a slight cost risk that ultimately all customers will want to buy the Supercharger upgrade and receive unlimited, free long distance travel for life. Even for those that never drive long distances, this will improve the resale value of their car to people that do.

ABOUT TESLA

Tesla Motors' (NASDAQ: TSLA) goal is to accelerate the world's transition to electric mobility with a full range of increasingly affordable electric cars. California-based Tesla designs and manufactures EVs, as well as EV powertrain components for partners such as Toyota and Daimler. Tesla has delivered almost 10,000 electric vehicles to customers in 31 countries.

Forward-Looking Statement

Certain statements in this press release, including statements regarding the expected profitability of the company, the availability of vehicle features and options and the Supercharger network, are "forward-looking statements" that are subject to risks and uncertainties. These forward-looking statements are based on management's current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. Various important factors could cause actual results to differ materially from those in the forward-looking statements, including the risks and uncertainties identified under the sections captioned "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results Of Operations" in Tesla's Form 10-K filed on March 7, 2013. Tesla disclaims any obligation to update information contained in these forward-looking statements.


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