Telsa announced today that sales of its new Model S, which won MotorTrend magazine's Car of the Year award, is exceeding sales targets, prompting the company to project a profitable first quarter. It is the first profitable quarter since the company went public in June 2010. Tesla's projected operating profit stands in sharp contrast to the $89.9 million it lost during the final three months of 2012.
"I am incredibly proud of the Tesla team for their outstanding work. There have been many car startups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution," said Elon Musk, Tesla Motors co-founder and CEO. "I would also like to thank our customers for their passionate support of the company and the car. Without them, we would not be here."
Profitability is somewhat surprising because the U.S. buying public is still very lukewarm toward electric cars. The lack of charging stations and high prices of vehicles have dampened interest, along with gas prices that remain below $4 per gallon in most parts of the country. Tesla's Supercharger network allows Model S owners to recharge for free at locations in California and along the East Coast.
Tesla continues escalating production of the Model S, which costs between $94,900 and $105,400 for versions that will go 208 miles per charge 265 miles per charge respectively. The company said it is suspending production of a lower priced model with a shorter range that cost $57,000 and only went about 100 miles on a charge. Only 4 percent of buyers have reportedly been purchasing that version.
That product mix would indicate that early purchasers are very wealthy, and probably buying the Model S as a third, fourth or even fifth car.
Investors have been betting against Tesla with investors holding nearly 30 million Tesla shares short. Shares of the company responded to the news by climbing 13.5 percent in early trading after the announcement. Tesla was trading at $43 a share, well above its 52-week low of $25.52.
David Kiley is Editor-In-Chief of AOL Autos