Elon Musk says Tesla will be able to make as many as "a few million cars" by 2025, a feat that would put the Palo Alto, Calif. car company at par with Fiat Chrysler, which sold 2 million cars in 2014.
Speaking at the Automotive News World Congress in Detroit, which coincided with the North American International Auto Show, the Tesla CEO said he was confident that his company would be selling at least half a million cars by 2020, during which he said he was "absolutely certain" that Tesla will be able to reduce the cost of manufacturing batteries by 30 percent. By 2025, Musk predicted that Tesla would be selling at least 2 million electric vehicles.
This is despite the fact that Tesla sold only 30,000 electric cars in 2014 and Musk still has to elaborate how he plans to bridge the 470,000 gap in five years.
"At half a million cars a year, we should be profitable," Musk said, although he acknowledged that he had been "too optimistic" in the past, over-promising on things that he thought could be done sooner than in reality.
Musk also announced that the low-cost Model 3 electric sedan that many believe will be the make-or-break vehicle for Tesla will be available in 2017. However, he admitted that Tesla may not have the means to fill the demand for the high-volume vehicle at that time. Investors will have to wait at least five more years until Tesla, whose stocks rose nearly 48 percent in 2014, becomes profitable.
He also explained that Tesla would be making money now if it is not investing in an aggressive growth strategy that involves new technology and vehicles. Currently, Tesla is investing more than $2 billion in building a massive battery factory in Nevada in partnership with Panasonic.
"We've been able to gross margins in the mid- to high-20 percent range," he said. "We could make money under GAAP (generally accepted accounting principles)."
The announcement could dash investors' hopes to start seeing returns on their investments by 2017, when the high-volume Model 3 makes it to market at $35,000.
"This is Elon Musk's MO, from as far back as his first vehicle," said Karl Brauer, senior analyst at Kelley Blue Book. "Whatever the numbers were -- what it would cost, how far it would go, how fast it would go, and when it would be available -- every one of those figures got revised on an ongoing basis, and always in the wrong direction."
Asked about his reaction to an earlier announcement made by General Motors (GM is claiming it will roll out the 200-mile range Chevrolet Bolt all-electric car also in 2017 and also at around the same price as the 200-mile range Model 3), Musk said he was pleased that GM CEO Mary Barra is starting to head in the direction of electric vehicles.
However, he continued to stress that automakers should make significant investments in electric vehicles and reach "serious production" of at least 250,000 electric cars every year, which is also the number needed to become profitable.
"It's important for leaders of the three carmakers to accelerate their investment in electric cars in a serious way -- I'm not talking about the minimum number of compliance," he said later at a press conference.
While Musk was urging other companies to invest in electric vehicles, Tesla stocks dove down seven percent in after-hours trading following news of lower-than-expected sales in China. The stocks closed at $204.25, up two percent, at day's end but dipped to $191.95 after hours following Musk's statement to the Wall Street Journal about the lukewarm response in China.
Musk explained it as a "misperception" among Chinese citizens living in large housing complexes about the difficulties of charging an electric car.
"We'll fix the China issue and be in pretty good shape probably in the middle of the year," he said.
Tesla made a total revenue of $2.24 billion in the first three quarters of 2014, up 60 percent from the previous year. It posted a net loss of $186.4 million from 2013's $57.7 million.
