Tesla: Revenue up a bit – Losses up a lot

Tesla are reporting revenue up by 5% in 2010, but losses rise by almost $100 million to $154.3 million.

How do you make a small fortune building electric cars? Simple. You start with a large one.

It’s an old joke, but it could have been penned for Elon Musk, the man behind Tesla – and the man behind PayPal. When PayPal sold to eBay a decade ago, Musk was thought to have received around $200 million for his holding. Not bad for a then 30 year old.

But last year, in a court filing in the US, Musk claimed to have run out of cash and be living on loans from friends. The cause? Well, no doubt a degree of convenience with an ex-wife to appease, but the constant cash destroyer that is Tesla is doubtless to blame.

To Musk’s credit, he has been willing to continue to invest in Tesla even though it continues to make losses. That willingness to put his money where his mouth is has reassured investors through some tricky times at Tesla, but at huge personal cost for Musk.

Things are probably more stable now for Musk than a year ago, but also a long way from the wealth he had a decade before. Tesla now has some big-hitting investors on board (away from the Silicon Valley money that launched Tesla) in Toyota and Daimler, so it’s unlikely Musk is going to be struggling to put food on the table anytime soon.

Those big investors may help ease the pain, but losses continue to rise at Tesla. Total losses in 2010 were $US154.3 million on revenue of $US116.7 million. Revenue was up just $5 million on 2009; losses increased by almost $100 million.

None of which is that surprising. Even with the ability to turn a $30k Lotus in to a $100k Tesla Roadster by adding an electric motor and thousands of laptop batteries, Tesla just doesn’t make enough ‘Stuff’ to sell. Yes, its technology seems to be in demand (mainly from investors Toyota and Daimler) but its entire future – certainly as an independent – rests on the Tesla Model S Saloon.

Still, if Musk manages to bring in the Tesla Model S at the $50k he has constantly stated – and be properly profitable at that price – the future for Tesla, and Musk’s much-depleted fortune, could be rosy – despite the current losses.

But that’s still a big ‘If’.