It apparently is not an April Fool’s gag. Tesla Motors, the start-up, electric-car company is finally profitable.
Telsa announced today sales of its new Model S, which won MotorTrend Car of the Year, are exceeding sales targets, prompting the company to project a profitable first quarter. It would be the first profitable quarter since the company went public in June 2010.
“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 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 continues escalating production of the Model S, which costs between $94,900 and $105,400 for versions that will go 208 miles per charge or 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.
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It’s a brand of car that has been vilified by Republicans, and specifically the unsuccessful Romney campaign for the White House. But the upstart electric vehicle company Tesla has garnered the much coveted “Car of the Year” award from Motor Trend Magazine, as well as Automobile Magazine.
The Tesla Model S, with a $57,400 base price, beat out established and vaunted competitors including BMW and its new 3-Series sedan, Ford Motor Co.’s Fusion sedan, Honda Motor Co.’s redesigned Accord and the 2013 Lexus GS. Motor Trend noted it’s the first time the award went to an electric vehicle.
“It is a testament not only to the luxury and electric car segment, but to American engineering overall,” said Edward Loh, editor-in-chief of Motor Trend.
Tesla, as well as another luxury electric car-maker — Fisker — have received an outsized amount of attention this past eection year because Republicans, including former White House hopeful Mitt Romney, heavily criticized the Obama administration for granting Department of Energy loans, in the hundreds of millions, to these start-ups as a waste of tax-payer money.
Politics aside, the Motor Trend endorsement is huge for Tesla, as it is considered the most influential of the”Car of The Year” awards.
Click through and take a look at why the experts are in love with the Tesla Model S.
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Remember when candidate Mitt Romney called Tesla “a loser” during the second presidential debate, akin to failed solar company Solyndra?
Romney was looking purely at the company’s latest financials, which did, in fact, reflect a big loss, as well as considering his own apparent disdain forEVs.
But in heaping praise on theModel S, MotorTrend said, “The Model S…is a very attractive, futuristic, and unusually purebred electric automobile.”
“The drivetrain is similar to the Roadster’s (rear drive) but upscaled; it’s an interesting decision as this means slightly compromising the recapturing of kinetic energy while braking in the service of rear-drive handling characteristics. While the Model S has plenty to drool over — its Franz Von Holzhausen-designed shape is simply spectacular, and its dash’s immense, nearly buttonless touch-screen is exactly the sort of thing Steve Jobs would do …”
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What Steve Jobs would do? High praise indeed.
More from MotorTrend: “It’s a hatchback sedan with an optional ($1500) third-row of child seats, that can still accommodate 8.1 cubic feet of luggage under its “hood”– a difficult task for many three-row SUVs, but not for an EV with a 4-inch-thick battery pack under the floor and an its electric motor tucked between the rear wheels. There’s no engine-start button — climb aboard with the key and it’s ready to go; walk away and it powers down and locks up. There’s no parking brake handle or switch, it just automatically engages when you select park.”
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We are used to seeing electric cars that get less than 100 miles on a charge. The Model S goes 265 miles per charge as rated by the EPA.
Considering that some 80% of drivers travel less than 50 miles a day, the viability of the car is pretty clear. Then, consider that 265 miles pretty much gets people past what we refer to as”range anxiety,” (the fear that you will run out of power) and interest in Model S could go way up off the Motor Trend and Automobile awards.
The car, which is manufactured in Fremont, Calif. at a plant that previously built Toyotas, Chevrolets and Pontiacs, goes 0-60 in 3.9 seconds.
Clearly inventor/entrepreneur Elon Musk is on to something. He knows how to put one sweet ride on the road. The remaining question is whether his organization knows how to service cars and customers long term. That is what separates successful upstart companies from ones that are flashes in the pan.
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Despite the good news for Tesla from the buff magazines, the finances of the company remain a little precarious.
In the most recent quarter, Tesla reported a $387 million loss on $146.3 million in revenues. That is, in large part, because of high start-up costs associated with the Model S before sales start rolling in.
Analysts remain fairly bullish on Tesla’s prospects in part because the top 5% of income earners in the U.S. are in pretty good financial shape and are expected to bite for Tesla in larger numbers with the endorsement of two major enthusiast magazines to bolster their buying decisions.
Tesla is trading above $32.00 a share today, up from its $23.83 closing price on its initial public offering day in 2010.
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