Tesla Will Make Millions of Electric Cars

Elon Musk Dismisses Tesla Challenges In Detroit, Talks Of Sales Growth

Tesla CEO and founder Elon Musk at the 2015 Detroit Auto ShowSilicon Valley automaker Tesla Motors will be making “a few million cars” by 2025, enigmatic CEO Elon Musk said in Detroit today. That would make the company about the size of BMW today.

Musk, speaking at the Automotive News World Congress event at the Renaissance Center this evening, also left the door open to eventually establish franchised dealerships. The automaker in 2014 made about 33,000 units of the Model S luxury electric car, its only vehicle, and expects 50% growth this year.

The Model S units are all sold through company-owned stores, but several states, including Michigan, have taken steps to block the automaker from selling cars directly to consumers through its own stores. Instead, Tesla would have to set up dealerships to sell in Michigan. Musk today said the company must first “establish a solid base with our own stores,” but he would eventually consider dealerships. He said the dealerships would have to focus on giving customers “an awesome experience.”

“What was most telling about this to me was Musk’s admission that he might consider marketing through franchised dealers in the future,” Jack R. Nerad, executive managing editor at Kelley Blue Book’s KBB.com, said in a report after the event. “Car dealers provide special functions for both consumers and the car manufacturers and by trying to go at it alone without dealers, Musk is making Tesla Motors’ task harder than it needs to be.”

Musk’s appearance in Detroit, the first time he’s been here in two years, came as several automakers introduced plug-in electric vehicles at the Detroit auto show this week.

That included General Motors, which unveiled the Chevrolet Bolt, a 200-mile electric vehicle concept priced at $30,000 after federal tax credit. The company is expected to introduce a production model of the Bolt in 2017.

“I think that’s great. I hope to see a lot more of that,” Musk said. “I don’t see it as a competitive threat because I think all cars will go electric.”

Tesla is developing its own version of an affordable electric car, called the Model 3, and targeted at the same time frame.

But Musk said he’s concerned about the effect of fracking on carbon emissions. The fracking boom in the U.S. has helped spark a global collapse in oil prices, making gasoline cheap and creating less incentive to buy electric vehicles.

He also said:

–Tesla would eventually need factories in other states and countries when its sales top half a million. Asked whether he would consider Detroit for a factory, he responded: “It’s not out of the question. Maybe Michigan shouldn’t stop us from selling cars here. That would be a nice gesture.”

–Tesla doesn’t release monthly sales figures because it would confuse consumers. Orders are up, he said, but he wouldn’t provide details.

–Hydrogen cars aren’t realistic, echoing previous remarks.

“I don’t want to turn this into a debate on fuel cells. I just think they’re extremely silly,” he said.

–His increasing celebrity is a “double-edged sword.”

“It’s gotten a lot harder for me to just go out and have a drink at a bar,” he said.

–He’s “absolutely certain” Tesla can achieve a 30% battery cost reduction by 2020, bolstered by a massive new battery factory in Nevada, and expects to continue cost improvements after that.

“If it doesn’t, I should definitely be fired,” he said.

–The Model X crossover, which has been delayed several times, will reach consumers this summer. But orders are backed up by at least a year.

“I do have an issue with punctuality,” he joked.

Tesla Motors Inc. (TSLA) tumbled the most in more than two months after Chief Executive Officer Elon Musk cited slowing sales in China amid charging concerns and said the electric-car maker won’t become profitable until 2020, when annual deliveries reach 500,000.

Tesla fell 5.7 percent to $192.69 at the close in New York, for the biggest one-day drop since Oct. 27. The stock’s slide came after Musk’s first-ever appearance at the Automotive News World Congress yesterday, where he reiterated a comment about China that he made a day earlier to Bloomberg News. The shares, which had gained 48 percent in 2014, are down 13 percent this year.

Musk also elaborated on the idea that he isn’t chasing profitability in the short term. He said the company is investing in growth.