Tesla Motors Inc (TSLA) Finally Swings to a Profit

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. (TSLA)

Company Overview

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.

Competition

The electric vehicle and hybrid space is obviously getting more crowded, as more and more manufactures have wizened up to the importance of this type of offering. The price tag of the Model S may be one of the biggest hurdles for consumers. Whereas a Volt can be had for around $40,000, and the Prius Plug-In starts at $32,000, you won’t get a new Model S for less than $70,000. On the other hand, the Model S is said to have triple the range of competitors at about 265 miles, as well as luxury interior and large passenger capacity. The two hybrid competitors mentioned here don’t have much full-electric range to speak of, both topping at around 40 miles. In terms of fully electric competition, the world’s bestselling EV’s are the Nissan Leaf, with nearly 50,000 units sold in 2012, and the Mitsubishi UFJ Financial Group Inc (ADR) (NYSE:MTU) i-MiEV, with around 27,000 units sold.

The bottom line

With Tesla Motors Inc (NASDAQ:TSLA)’s first quarterly profit since becoming a publicly traded company, it appears as if the company has turned a corner. This is not only good news for Tesla Motors Inc (NASDAQ:TSLA), but also for the viability of fully electric cars as an alternative to traditional gasoline powered vehicles. While the Model S is clearly an up-market product, reflected in the hefty price tag, the increased interest in the vehicle is encouraging. In any case, the new financing program should make it easier for consumers to access a Model S. It will be very interesting to see how this company performs over the rest of the year.

Daniel James has no position in any stocks mentioned. The Motley Fool recommends General Motors and Tesla Motors. The Motley Fool owns shares of Tesla Motors.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!