Finally, we know the number. Tesla Motors announced today that it sold 5,150 Model S electric vehicles in North America last quarter. Divide by three and you see that the California company sold around 1,700 cars a month, which puts it right up there with the current plug-in vehicle champions, the Nissan Leaf and the Chevy Volt. That's despite the fact that the cheapest Model S, which starts at $69,900 but often sells for a lot more with better options, costs at least twice as much as the sales leaders. Tesla said it was making "almost 500 vehicles per week" in the second quarter of this year.

Tesla says its "financial position and balance sheet have never been stronger."

The sales contributed to an overall increase in net income (non-GAAP) of 70 percent compared to the first quarter, up to $26 million. Tesla said it achieved a gross margin of 22 percent (non-GAAP), "despite significant reduction in ZEV credits" (which was no surprise) and should hit 25 percent by the fourth quarter of 2013. That number is simply a company's sales revenue with the cost of goods sold taken out, divided by total sales revenue. Put it all together and you get the following statement: "Our financial position and balance sheet have never been stronger." Still, there was no talk in today's conference call of an overall profitable quarter, as there was three months ago.

With all of the good financial news, Tesla and CEO Elon Musk said the primary focus now is on "expanding production to meet worldwide demand." Tesla started delivering the Model S to Europe this week (the first lucky countries were Norway, Switzerland and the Netherlands) and if demand there matches North America, which Musk said is likely, then the company predicts "annualized sales for Model S could exceed 40,000 units per year by late 2014."

In China, the Model S will have an "executive back seat" instead of the current "family back seat."

Musk said the upcoming new-market Model S versions (right-hand-drive for Japan and the Chinese model) are taking up most of Tesla's resources at the current moment. In China, for example, the company is trying to improve the comfort level of the rear seat, because it is common for people in The People's Republic to be driven around. The Model S was designed to be the perfect driver's car, Musk said, but in China it will have an "executive back seat" instead of the "family back seat" the car has now. Things like this mean that work on the Model X won't really start to ramp up until the end of this year. Deliveries of that car should start at the end of 2014.

Looking further down the road, Musk said that the next-gen Tesla vehicle, the long-rumored $35,000 (without any subsidies) EV, should be a compelling option with a 200-mile range. That vehicle is still quite far away – he wondered aloud how his company might need more battery cells than the laptop industry does if it's making a half-million cars a year – but at least his automotive competition now has targets to shoot for if they want to beat Tesla in the longer-range EV game.


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  • 256 Comments
      DarylMc
      • 2 Years Ago
      Hi Grendal Fair call. I think Tesla, as a premium manufacturer needs to be careful they don't alienate too many future customers. It is my opinion that technology is the new religion for the masses. They have done it well but things could just as easily swing against them.
      Scott
      • 2 Years Ago
      Car companies with a century of experience also have a century of baggage. It's no wonder a startup is leading the EV charge.
      kEiThZ
      • 2 Years Ago
      @Dean Hammond Didn't you once say Tesla wouldn't succeed because of its sales model? And Tesla has already raised prices. Good for them for doing that. They aren't demand constrained. They are production constrained. So they'll be able to nicely capture a larger chunks of profits....and they won't have to share it with greedy dealers!
      Dean Hammond
      • 2 Years Ago
      well, dare I say it, MSRPS WILL go up, right now it looks like hes making $5000 a car, I would have thought with all the conversation about waiting lists, sold out etc etc , that margin would be more, so I think its coming....
      Grendal
      • 2 Years Ago
      You can also have fun blowing out every car off the line. The exceptions are Supercars. Most people wouldn't expect to beat them anyway.
      Spec
      • 2 Years Ago
      Where are they going to find buyers for all those high-end cars?
      A_Guy
      • 8 Months Ago
      I am specifically referring to the article that states $35k (without subsidies), which I read as before applying any government incentive, not after. Other than that, I am not sure what is actually the case.
      2 wheeled menace
      • 2 Years Ago
      I think it's time to pick up a second job..
      Jonathan Wayne
      • 2 Years Ago
      I was discussing this with my brother on a road trip we did this weekend, did not even know they had a model this cheap planned. I told him, if Tesla make a relatively cheap car with decent range, they will really change the game and pretty much kill everything. Pretty damn hard to pass up a $35K car that costs you maybe $30 a month to use, maybe nothing if you live near a supercharging station. If that gets done, the oil and gas industry will have some pretty sleepless nights.
      raktmn
      • 2 Years Ago
      Ziv, you are not reading GAAP correctly. Even under GAAP, where the income from "lease" sales is not yet booked this quarter, that money was very much received by Tesla this quarter. It is not accurate to pretend that this money doesn't exist and therefore claim that Telsa operated at a genuine loss. Delayed booking of profits is no where near the same as a loss. A real loss would have been if it cost Tesla an extra 70 million to build the cars they did sell, and they had no future bookable income to show for it. That is what Giza was claiming would happen. He was calling for a $40 million dollar loss with nothing to show for it, instead of the $28 million in non-GAAP profits, or $30 million in GAAP losses with more revenue still to be booked in the future. Giza blew it by $70 million dollars, no matter if you look at GAAP or non-GAAP figures.
        raktmn
        • 8 Months Ago
        @raktmn
        grrr!! This should have been posted as a response to Ziv below. Don't know why it showed up here.
        kEiThZ
        • 8 Months Ago
        @raktmn
        That's okay. Down the road, this will make Tesla look even better.
        Ziv
        • 8 Months Ago
        @raktmn
        raktmn, I have looked at the different ways Tesla has stated their earnings and I tried to qualify my comment because I have no idea which way of reporting will make more sense in the long run. But I did think it was worth it to say that the 'profit' that was being reported came with an asterisk. I really want Musk to succeed with both Tesla Motors and Spacex, but I don't want to blind myself to the problems both will face in the next 4 or 5 years.
          Joeviocoe
          • 8 Months Ago
          @Ziv
          Even the term "Zero Emissions" comes with an asterisk. But we must avoid the temptation to completely discount something, just because of the existence of caveats.
      CoolWaters
      • 2 Years Ago
      What is the GAAP issue? That GAAP spreads the profit over the term of the lease? vs. Tesla taking the profit they receive the lease payment?
        raktmn
        • 8 Months Ago
        @CoolWaters
        The way Tesla constructed their lease is completely different from other car companies. The way the Tesla lease works, is that Tesla sold the car to the customer at full price, and the customer goes to Wells Fargo and gets that money and hands it to Tesla. Tesla has all that money in their pocket, and Wells Fargo is the first lien-holder on the car. Tesla has not banked those profits under GAAP accounting, even though they have 100% of that money in their hands. That is because Tesla's lease isn't actually a lease, but a guaranteed buyback program. Tesla is still on the hook for the buyback clause in the contract (Wells Fargo has nothing to do with that, they aren't the lessor). Tesla can't book those dollars that are already in their hands under GAAP rules, because the agreement isn't closed until the car is either bought back and resold under the buyback program, or the clause expires after 39 months. If the clause expires and the owner keeps the car (or decides to sell it themselves) then Tesla books 100% of that money they already received. If Tesla has to buy back the car for the guaranteed price, Tesla would have to re-sell the car before they can book profits on it. The profits would then be Original Price - Buyback Price + Resell Price. And that can't be determined for up to 39 weeks.
        CoolWaters
        • 8 Months Ago
        @CoolWaters
        So, yes, that's the issue. They have banked the profit, but they haven't "earned" the profit, except monthly, in 1/36 intervals. However, most leases aren't broken, in the price range, so there's not much risk they won't "earn" this profit.
      Joanne Dochev
      • 2 Years Ago
      Finally. An American car we can all be proud of.
        mylexicon
        • 8 Months Ago
        @Joanne Dochev
        Finally. An *innovative, aspirational* American car we can all be proud of.
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