Tesla Motors Inc (NASDAQ:TSLA) is in the spotlight once again today, in account of two important announcements. First off, the firm appeared at the Internationale Automobil Ausstellung (IAA) in Frankfurt, stating its intention to expand into the European market. Second, the company presented the Model S buyback option, which will allow customers to sell their used car back to Tesla in a lease-style option.
The expansion into the European market has been in the works for some time now, with the availability of supercharger stations being the main hurdle. Elon Musk, CEO of Tesla Motors Inc (NASDAQ:TSLA), gave shareholders reason to be optimistic when he announced that, “This year will be one of tremendous growth and expansion throughout Europe in some of Tesla’s most important markets, including Germany, Switzerland, Norway and the Netherlands” (Tesla Press Release).
According to the company, this will be accomplished by offering supercharger stations in several European countries, within 320 kilometres of each other by the end of 2014. Further, there will be Tesla Motors Inc (NASDAQ:TSLA) stores and service centres by the end of 2013 in Hamburg, Düsseldorf, Stuttgart, Berlin, Paris, Cote d’Azur/Provence, Stavanger, Vienna, Amsterdam, Basel, Geneva, Rotterdam, Arnhem, Stockholm and London.
In addition to its projects for European expansion, Tesla Motors Inc (NASDAQ:TSLA) also confirmed the buyback plan for its Model S. This option is bound to increase revenue for the electric car maker, by allowing the firm to control vehicle resale prices more effectively than traditional car manufacturers. According to analysts, the sales of used Model S could generate an additional $40 million in gross profit annually, by 2016. This plan will give Tesla Motors Inc (NASDAQ:TSLA) full autonomy in vehicle resale, and thus the firm can avoid negotiating with dealers. By handling all resale, the company can assure lower and fixed prices for customers and make additional revenue, which otherwise would not be available. Elon Musk even gave personal assurances, vowing to ensure Model S resale prices, even if it meant making use of his personal fortune.
The market reaction to both these announcements comes as no surprise. Tesla Motors Inc (NASDAQ:TSLA) was up 2.61% as of 13.22 p.m. New York time.
Disclosure: Pablo Erbar holds no position in any stocks mentioned