Perhaps the greatest challenge of our time is weaning ourselves off our crippling dependence on fossil fuels, and moving towards renewable energy sources as a means of fulfilling our power needs. Cars are one of the biggest guzzlers of these fossil fuels, and as such, electric cars have been getting a lot of attention over the last few years. Tesla Motors Inc (NASDAQ:TSLA), headed by Paypal’s Elon Musk, is one of the companies on the frontier of electric vehicle manufacture. After three years of losses, the firm has finally announced a quarterly profit. This is a very important development for the company, and ultimately, the viability of producing electric cars.
Tesla Motors Inc (NASDAQ:TSLA) engages in the design, manufacture and marketing of electric vehicles and powertrain components. The company sells its products through its 32 stores in America, Europe and Asia, as well as over the internet. The company has less than 3,000 fulltime employees and a market cap of around 5 billion dollars. The stock is up some 18% in the last twelve months, much of this gain following the most recently quarterly earnings report.
First Quarterly Profit
Since making its market debut in 2010, Tesla Motors Inc (NASDAQ:TSLA) consistently posted losses. This isn’t necessarily unusual for startups, and especially for those in a pioneer industry like electric vehicles. However, annual EPS also missed estimates in 2010 through 2012, recovering somewhat in 2011 before dipping again in 2012 to a loss of $3.20 per share. Finally, the company reported guidance for first quarter of full profitability on Monday, sending shares flying 16%.
The driver for these positive earnings was the company’s flagship Model S sedan. The Tesla Motors Inc (NASDAQ:TSLA) model S scooped up the Car of the Year award, beating out some high-profile contenders such as Porsche and BMW. Sales for this model came in at over 4,750 vehicles, topping the previous guidance of 4,500. The company is now expecting a slight first quarter profit on a GAAP and non-GAAP basis. The company furthermore announced on Tuesday its plans for a financing program, which they hope will make it easier for consumers to be able to afford one of these cars.
Contrasting with this sales report was the news that electric vehicle sales for a number of other EV manufacturers dropped sharply in January, with General Motors Company (NYSE:GM)‘s Chevy Volt sales down 57% and the Toyota Motor Corporation (ADR) (NYSE:TM) Prius Plug-In down 36%. According to General Motors Company (NYSE:GM) officials, the drop in sales was largely attributable to the December spike, when many consumers bought a new vehicle to enjoy 2012 tax benefits. Toyota Motor Corporation (ADR) (NYSE:TM) officials on the other hand blamed the drop on model changeovers that limited the amount of vehicles up for sale. It is important to note that the Volt and the Prius Plug-In are not fully electric vehicles, but gasoline-electricity hybrids, whereas the Model S is indeed a fully electric vehicle.