Tesla CEO Weighs Europe, Asia Plants for Mass-Market Car

Tesla CEO Weighs Europe, Asia Plants for Mass-Market Car

Tesla Motors Inc. (TSLA) Chief Executive Officer Elon Musk said the electric-car maker intends to add factories in Europe and Asia, anticipating volume gains from a planned mass-market battery car. The company this year plans to make at least 21,000 of its $70,000 Model S premium sedans at its Fremont, California, plant, and double that in 2014. While the factory has capacity to produce as many as 500,000 vehicles a year, the addition of a smaller electric car priced about half that of Model S will require additional plants, Musk said.

“We’ll try to locate those close to where people are, close to where the customers are, to minimize the logistics costs of getting the car to them,” the Tesla co-founder said in an interview with Bloomberg Television’s Betty Liu. “I think long term you can see Tesla establishing factories in Europe, in other parts of the U.S. and in Asia.”Tesla, named for inventor Nikola Tesla, has seen its shares surge more than fourfold and its market value exceed some established carmakers such as Fiat SpA (F), the majority owner of Chrysler Group LLC. The Palo Alto, California-based company reported its first profitable quarters this year, excluding some items, and has seen demand for the Model S outstrip its ability to build the car.

Among the company’s accolades, Model S was named 2013 “Car of the Year” by Motor Trend magazine; Consumer Reports in a May review rated it among the best it’s ever tested; and this week Tesla said it received top crash and safety ratings in tests by the National Highway Traffic Safety Administration.

Tesla Expansion

Musk provided no details on how much or when Tesla would invest in more factories. The company has opened a small facility in Tilburg, Netherlands, where it’s assembling Model S components shipped from California to Europe, for cars it has begun selling there.

While Tesla’s next vehicle, the Model X electric sport-utility vehicle, goes into production at Fremont late next year, the timing of the smaller, lower-priced vehicle, isn’t firm.

“Certainly, within five years we’ll have our mass-market electric car available,” Musk told Liu, who is also a correspondent for ABC News. “We’ll start seeing hundreds of thousands of electric cars going to market every year.”

Musk, in previous interviews, has said the lower-priced car would arrive in about three or four years.

Trademark Application

The company this month filed an application with the U.S. Patent and Trademark office to use the name Model E for an automobile. Shanna Hendriks, a Tesla spokeswoman, declined to comment on whether that’s intended for the still-unnamed mass-market electric car. The trademark filing was reported Aug. 20 by the website VentureBeat.

In an interview at the Fremont factory last month, Musk said building another plant in California would be challenging, owing to the state’s high costs. The Fremont factory was opened in the 1960s by the predecessor of General Motors Co. (GM) It became a joint-venture plant for GM and Toyota Motor Corp. (7203) in 1984 and was acquired by Tesla in 2010.

“The real tough question is, beyond this plant, would we establish another plant in California?” Musk said in the July interview. “That’s where it gets really tricky. What I can say is we do want to ultimately bring this plant to its original production capacity of half a million vehicles a year.”

Liu’s interview is scheduled to be telecast on ABC’s “Nightline” at 12:35 a.m. New York time.

Tesla fell 1.1 percent to $147.86 at the close yesterday in New York. The shares have surged 337 percent this year, compared with a 16 percent increase for the Russell 1000 Index.

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

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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