Elon Musk seeks to make Tesla profitable in 2020 with lower-cost Model 3 electric vehicle

Elon Musk, CEO of US-based electric vehicle maker Tesla, said his company will report profit for the first time in 2020, when the production of the lower cost Model 3 vehicle would be in full swing.

Speaking at the Automotive News World Congress, Musk said Tesla would have to sell 500,000 cars a year to show a profit under generally accepted accounting principles. Founded in 2003, the company is yet to report a full-year profit.

The company could have reported profit "if we weren't growing and investing great amounts of money" in new models and on expansion plans, Musk said.

He added that Tesla will launch its long-delayed Model X sport utility vehicle (SUV) this summer, and the vehicle model would play a significant part in reaching its yearly sales target of 500,000 by 2020.

Musk said the Model 3 will be priced at $35,000, excluding state or federal tax incentives – half the price of a Model S. The model's rival the Chevrolet Bolt of General Motors is priced at $30,000, including incentives. Both vehicles, which have expected travel capacity of up to 200 miles on a single charge, are slated for launch in 2017.

Tesla recently re-engineered its Model S sedan to offer all-wheel-drive. It's also building a $5bn battery factory in Nevada.

However, the company's global expansion strategy is seemingly not working as intended.

Musk said that Tesla's sales in China were "unexpectedly weak" during the fourth quarter. He told The Wall Street Journal the lower sales were largely due to "misperceptions" among Chinese consumers about charging requirements for his car.