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Tesla Motors Inc (TSLA): Keep an Eye Here

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Tesla Motors Inc (NASDAQ:TSLA) finally found its Holy Grail with its Model S as the company turned profitable for the first time in the its 10-year history. It broke the electric car inertia by providing affordable and efficient cars and is a perfect demonstration of the entrepreneurial skills of its CEO, Elon Musk.

Tesla Motors Inc (NASDAQ:TSLA)

The company’s launch of the completely-electric Tesla Roadster sports car in 2008 was a great success. It totally sold out of production and the company is now focused on developing vehicles more suited for the mainstream consumer market. Tesla has proved to be an innovator and appealed to the early-adopters, but can it pass the test of time in the rattlingautomobile industry? Only time will tell.

First profitable quarter

First-quarter earnings were extremely impressive as Tesla Motors Inc (NASDAQ:TSLA) generated a profit of $15 million for the first time. Total revenue rose 83% from last quarter to $562 million as it beat its earlier estimate of 4,500 Model S sales and sold 4,900 in the quarter. The gross profit margin increased from 8% to 17% and the company says it will achieve a 25% target by the fourth quarter.

This was possible as research and development expenses decreased significantly with the launch of the new model. However, the quarter saw an increase in the selling expenses and expansion of store network and service infrastructure. It has reduced the manufacturing time to 40% since December in an attempt to improve execution and supply chain and roll out more mean machines.

Improving industry

According to an Electric Drive Transportation Association report, the sale of electric cars (including hybrid) increased by 72% in 2012 whereas the auto industry grew by 13.4%. It shows that the sales of electric-powered cars are rising at a much faster pace than the total number of cars sold.

(Source: EDTA)

The market share of electric-powered cars (including hybrids) was 3.38% in 2012, which became 3.8% in early 2013. Assuming the market will continue to grow as it did in 2012; electric cars are expected to reach 10% of the total car market by 2015.

Tesla led the electric vehicles sales in the first quarter in the US by selling 4,900 cars. Although the price of a Tesla is higher than its competitors, it had about 29% market share, the highest of any green car maker. However, the company will be reducing its sales in North America over the months as it starts selling to Europe and Asia.

Tesla Motors Inc (NASDAQ:TSLA) does not publish monthly sales numbers, but a look at the numbers posted by the other big players in the electric segment reflects the growing popularity of green cars.

Nissan Motor’s Leaf recorded its second-best monthly figure to date in May selling around 2,138 cars. This brings the total number of Leafs sold this year to 7,614. This is triple the number sold during the first five months of 2012. Analysts estimate that at its current pace, total Leaf deliveries in 2013 can be around 22,500.

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