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Elon Musk: Next Six Months Crucial to Tesla’s future

Even the always-bullish Tesla Motors founder says the next six months will be “very tough” for the electric car maker as it seeks more customers.

Elon Musk is considered one of today’s most audacious technology entrepreneurs. But even he recognizes that Tesla Motors is entering a challenging period for the electric vehicle company.

Musk, who founded Tesla and space exploration company SpaceX, spoke last week at the Clean Energy Summit where he sounded a cautionary note with regards to Tesla’s near future.

“The challenge Tesla faces over the next several months, which is a very difficult one, is to scale up production and achieve enough of a gross margin on the product that we get to a situation where we’re cash flow positive. If we aren’t able to do that we will join the graveyard of all the other car company startups of the last 90 years,” he said according to an article at AOL Energy.

Telsa began shipping its Model S electric sedan earlier in June, a car targeted at consumers looking for an alternative to more established luxury models. The base price is just under $50,000 after factoring in a $7,500 tax credit. But models with a large enough battery to allow for a 300 mile range will be priced at $87,900 after the tax credit.

At an event where Tesla delivered its first Model S, Musk boldly predicted electric vehicles would represent half of new car sales in 2020, far exceeding the low percentage most auto analysts forecast for all-electric vehicles.

The company expects to meet its target of selling 5,000 cars this year. How Tesla fares in attracting buyers beyond those who already reserved their Model S’s will determine whether Tesla will survive and in what form. It projects selling 20,000 cars next year, which is a relatively high number among luxury brands. Tesla also needs to make a profit on those shipments. If it can become cash-flow positive, Telsa can pursue its long-term plan to make a more affordable electric vehicle, Musk said.
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