Tesla Motors: A Profitable Company?
After going public in 2010, ten-year-old Tesla Motors (NASDAQ:TSLA) is now proving itself to be a viable electric car manufacturer; new models, profitability, and retail expansion are all on the company’s horizon.
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Production concerns dogged Tesla throughout the last months of 2012, but the company announced on January 13 that it had reached its target production rate of 20,000 vehicles per year for its Model S sedan. In late September, worries over its lower-than-anticipated vehicle production rate prompted the company to lower its projected revenue for 2012 to a range of $400 million to $440 million. However, with the company’s production on track, lowered revenue forecasts are no longer on the mind Chief Executive Office Elon Musk, who told Reuters that the company is now aiming at earning its first profit this year.
“I’m hoping we’ll have a profitable quarter this year,” Musk said while accepting an award in Detroit. “Shame on us if we can’t achieve that.”
Tesla is already set to capitalize on its higher production rates. Technology publication Engadget reported on Tuesday that the company will expand its retail footprint in the United States and abroad this year. The car manufacturer opened 13 stores last year, and George Blankenship, Tesla’s vice president of sales, has confirmed that that number will grow to 25 this year. Half of the projected outlets will open their doors in foreign countries, including one location in China. In line with its expansive vision, the company also plans to grow its network of Supercharge charging stations, a free service that aims at allowing Tesla owners to drive from coast to coast without burning any fuel or spending any money on energy costs. With only eight operational stations, located primarily on the West Coast, the plan is quite far from being materialized, but the company will be adding additional charging stations this year as well…
Further good news for Tesla came out of the annual Detroit Auto Show on Tuesday. With General Motors’ (NYSE:GM) Chief Executive Officer Dan Akerson unveiling a new 450-horsepower Chevrolet Corvette and Fiat’s (FIATY.PK) Sergio Marchionne showing off the company’s $130,000 Maserati Quattroporte luxury sedan, auto executives have made this year’s industry trend clear; sportscars are in and electric cars are out in 2013.
While Tesla may make electric vehicles, they are no doubt luxurious. Tesla’s family of automobiles cost between $60,000 and $120,000, which is the “sweet spot” of demand for electric vehicles, according to a JPMorgan Chase research note seen by the publication. Its cars compete in an entirely different market from the lower-priced offerings from General Motors like the Chevrolet Spark, expected to be priced under $25,000 after the federal tax credit, and Ford’s (NYSE:F) electric Focus sedan, which starts around $39,200. And there is no doubt demand is incredibly high, with a packed waiting list and reports from those who have driven the Model S describing the experience almost religiously.
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With production goals hit, the electric car manufacturer is expected to launch the Model X, a luxury crossover vehicle built on the Model S platform, by the second half of 2014.
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