Tesla marks key milestone with first-time profit

May 8, 2013 12:00:00 AM PDT
Tesla Motors, the electric car manufacturer based in Palo Alto, has reached an important corporate milestone. For the first time, the company is reporting a profit. Its stock is soaring in after-hours trading; it's gone up more than $13 a share since the announcement was made Wednesday afternoon.

The Palo Alto company is polishing up its image with these latest earing's numbers. Revenue was reported at $562 million and its first quarter profit just over $11 million -- compared that with a loss of $89 million a year ago. After-hours trading saw the company stock shoot up 20 percent.

In Tesla's earnings call on Wednesday CEO Elon Musk said the company is on track to sell 22,000 cars this year. The Model S electric sedan retails in the $80,000 to $110,000 range, but in the conference call with reporters, Musk said the financing the car rather than it outright could increase the market ten-fold because owners playing by the month would appreciate the monthly savings from not having to buy gasoline.

"In the U.S. you maybe save $200-$300 a month in gasoline relative to electricity costs, if you're a daily driver. In Europe obviously, that number can be double," said Musk.

Saving $500 a month in gas could make the Tesla a much more attractive car in Europe, but for now, the company expects to sell 15,000 cars in the U.S., 5,000 in Europe and 1,000 in Asia.

When asked how many cars are selling compared to the number of people who walk into the showroom, the company CEO laughed saying he has a million people walking in every month. Obviously most just want to have a look.

"I think a better metric would be a qualified lead after a test drive and we're seeing something like a 25 percent conversion after a test drive which is quite high," said Musk.

In this showroom in San Jose, a lot of people come in and look. Tyler and Jennifer Schaffer from Morgan Hill listened to the pitch and they're ready for that test drive.

"Uh, yes absolutely. Yeah, it's a great vehicle," said Tyler.

Brian Bohan of Fremont isn't yet because he says, "I like Jaguars and Austins."

Analysts expected Tesla would show a profit of four percent a share, instead it was three times that. With production up 80 percent and production costs falling at its Fremont factory, those folks with Tesla stock are just a little closer to being able to afford one of their cars.


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