In recent years, the electric car has been hyped, debated,
derided, and even used as "a political punching bag," in the words
) serial entrepreneur CEO
. Republican presidential candidate Mitt Romney lumped Tesla in
with other green energy "losers" like Solyndra. Just last month,
Sarah Palin used that label for Tesla, too, when she
took to Facebook
to criticize the Obama administration for backing another electric
car maker, Fisker Automotive, which may soon file for bankruptcy
protection: "This losing tax-subsidized venture joins other past
losers like the Obama-subsidized Volt that gets 40 miles per
battery charge, or like the Obama-subsidized Tesla that turns into
a 'brick' when the battery completely discharges and then costs
$40,000 to repair."
Palin's point, like Romney's, was that the government shouldn't be
in the business of picking winners and losers in the marketplace.
Well, Tesla may have gotten $465 million in loans from the Energy
Department to develop and build its cars, but it says it will pay
off the loan by 2017, five years early. And if the market is
picking, the company is anything but a loser right now.
The 10-year-old company on Wednesday reported its first-ever
quarterly profit, with earnings of $11.2 million, or $15 million
excluding one-time items, on revenue of $561.8 million for the
first three months of the year. Those sales were helped by $68
million from sales of Zero Emission Vehicle credits to other
automakers. Tesla's gross profit margin for the quarter was 17.1%,
up from 8% for the prior quarter and higher than Ford's 11% margin
for its North American business.
Tesla sold 4,900 of its Model S in the first quarter and expects to
sell about 21,000 cars this year - or,
Wall Street Journal
, "four times the combined US sales of Maserati, Lamborghini, and
Ferrari." For the quarter, Tesla also outsold Chevy's Volt plug-in
hybrid and Nissan's Leaf. (On the other hand, Toyota sold nearly
56,000 of its various Prius models in the first quarter and was
aiming to sell 250,000 of the hybrids this year, though it said
last month it
may not reach that goal
as gas prices fall faster than expected.)
Then on Thursday, the famously stringent testers at
showed how charged up they were over the battery-powered Model S.
The car scored a 99 out of 100 on the magazine's rating system,
matching the highest rating of any vehicle ever tested and
prompting an outpouring of superlatives. The reviewers praised the
car's design, construction, and handling, while warning about the
Tesla's limited driving range (about 208 or 265 miles on a charge,
depending on which battery is in the car) compared to gas-powered
vehicles. The car,
said, "is brimming with innovation, delivers world-class
performance, and is interwoven throughout with impressive attention
to detail. It's what Marty McFly might have brought back in place
of his DeLorean in
Back to the Future
." In case the point wasn't clear enough, they also wrote that the
Model S is "truly a remarkable car."
That echoed earlier praise
, which also called the Model S "truly remarkable." In November,
had named the Tesla Model S its 2013 Car of the Year.
an even loftier designation
: "So is the Tesla Model S the best car ever? We wrestled with that
question long and hard. It comes close. And if your needs are
confined to Tesla's driving range, it just may be."
So even if it's not the best car ever, Tesla might just have had
the best week ever. Such high praise from the tough, typically
reserved reviewers at
could put the Tesla on the lists of plenty of luxury-car shoppers.
And combined with the profit and sales picture from earlier in the
week, it has already scored the company huge gains in the stock
market. Tesla shares jumped more than 40% last week and have now
rocketed 127% on the year. Many of those who bet against the
company - and there has been no shortage of short sellers - had to
scramble to cover their positions, fueling the rally. Tesla now has
a market capitalization of $8.7 billion. That's "truly remarkable,"
But Tesla still has further to go if it really is to become the
first successful automotive startup the US has seen in nearly a
Justin Lahart at the
Wall Street Journal
pointed out this week, Musk has laid out his plan: "First, build a
high-performance electric sports car, to prove it could be done.
Second, market a luxury car that broadens Tesla's appeal. Finally,
produce an affordable mass-market electric car." Step 1 is
complete. Step 2, already well underway, just got another huge
boost. Step 3, where the rubber will really meet the road, is still
in question. "It has always been my dream to produce a low cost,
compelling electric car,"
in March. "We are three to four years away. Wish it could be
To get there, Tesla is working to reduce component costs, improve
its manufacturing efficiency and speed its production process. "We
haven't really tried to push volume super hard yet," Musk told
analysts this week, "because I think you need to make sure that
staff is in order and the car is being made as efficiently as it
can be made before you try to push volume." At the same time, Musk
said that sales could grow next year as the company tests just how
much demand exists for a luxury electric car with a starting price
of $62,400 (including a $7,500 federal tax credit). "I think it's
probably quite a bit higher than what we had originally thought,"
the CEO told analysts.
Tesla will also need to build out an infrastructure that can
support electric cars nationwide. It will need better batteries and
a network of supercharging stations to allow drivers to hit the
road without getting stranded on the side of the road. Tesla isn't
necessarily going to do all that on its own, potentially partnering
with other carmakers such as Mercedes. As Farhad Majoo detailed
If Tesla's technology helps Mercedes sell a lot of electric
cars, the deep-pocketed luxury car company will have an incentive
to build its own charging stations, too - places where Tesla owners
could charge up. The more charging stations there are, the more
attractive both firms' vehicles would become. And then, as its
battery production scales up to meet that demand, Tesla's batteries
will likely improve as well, as many in the industry see increased
production as one of the main ways to lower the cost of
Editor's Note: This article by
originally appeared on
Tesla's ride won't always be as pleasant as it was this week, but
after a decade of promoting the promise of electric vehicles, the
road to success may finally be opening up.
For more from The Fiscal Times:
The 10 Most Incredible Cars of the Future
Why Americans Still Don't Drive Electric Cars
The 10 Greenest Cars to Buy in 2013
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