Tesla Motors Inc.
) is so pleased with its better-than-expected sales of the Model
S electric sedan that the company now expects to be fully
profitable in the first quarter of the year, rather than the
prior guidance of modestly profitable, excluding non-cash option
and warrant expenses. The news sent the stock to 52-week high of
$46.68 on Apr 1.
Sales of Model S in the first quarter were more than 4,750 units,
exceeding the guidance of 4,500 units. The same Model S was the
center of controversy in February following an article published
New York Times
. The article detailed the result of a test drive that raised
many questions about the viability of electric cars such as Model
S, but the report's validity was aggressively challenged by
Initially, Tesla launched two all-electric models, Roadster and
the Model S, with a price tag of $109,000 and $49,900,
respectively. However, the company has phased out Roadster later
due to its higher price tag and weak demand, and started relying
solely on Model S to rejuvenate its market share. According to
Environmental Protection Agency (EPA), Model S can travel up to
265 miles on a single charge of its 85-kilowatt-hour (kWh)
In 2012, Tesla lost $396.2 million or $3.69 per share compared
with $254.4 million or $2.53 per share in 2011. Due to a good
start in 2013, the company now plans to repay its $465 million
U.S. Department of Energy (DOE) loan much earlier and boost
vehicle production to lower costs.
Tesla made its first DOE loan repayment of nearly $13 million in
December last year while the second payment is due this month.
The company expects the deliveries of Model S to go up to 20,000
Tesla also denied plans of producing Model S with a smaller
battery pack (40 kWh) due to lack of demand, It will not be a
viable option as well because consumers would not have the
liberty to travel long distances. Instead, the company would
provide a 60 kWh batter pack vehicle to the customers, which will
have the improved acceleration and top speed of the bigger
Tesla currently retains a Zacks Rank #3 (Hold). While we
remain on the sidelines about Tesla, stocks from the same
industry that warrant a look include
). All of them carry a Zacks Rank #1 (Strong Buy).
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