Elon Musk warns that Tesla could "enter the graveyard" if it does not increase Model S production.
Tesla founder and CEO Elon Musk has admitted that his company's short-term future depends on how quickly the recently-launched Model S sedan can be delivered to customers.
The California-based automaker has reportedly received over 12,000 orders for its electric sedan since it opened the order book in 2010. The first car was delivered last June and all seems fine on the surface but there is a catch: Tesla must meet its goal of delivering 5,000 S sedans before December 31st of this year in order to stay afloat.
"The challenge that Tesla faces over the next few months is scaling production enough to achieve a certain gross margin on our product so we can be cash flow positive. That's extremely important," said Musk at the National Clean Energy Summit in Las Vegas, Nevada. "If we're unable to do that, we'll enter the graveyard with all the other car company startups of the last 90 years."
Producing and delivering 5,000 cars in such a short amount of time is a Herculean task for a small auto company and Tesla can't rush the process because mechanical issues and recalls will sully its reputation.
"It'll definitely be a very tough road over the next 6 months," acknowledged Musk. "We can't afford to make a lot of mistakes. If we don't make too many mistakes then we'll get to that period and we'll be able to bring out larger volume cars that are more affordable."
The Model S sedan is not Tesla's only source of revenue. The automaker has recently inked a contract with Daimler to develop an electric variant of the Mercedes-Benz B-Class and it helped Toyota design the all-eletric 2013 RAV4 EV.