Tesla electric car sales light up profitsUS electric car manufacturer, Tesla, announced on Monday 1st April that it had exceeded its own quarterly target of 4,500 vehicle sales. The company shipped 4,750 Model S cars. Tesla says it now expects to record a first quarter profit after the stronger than expected sales performance and shares in the company shot up by 19% on Monday on the back of the news.
US electric car manufacturer, Tesla, announced on Monday 1st April that it had exceeded its own quarterly target of 4,500 vehicle sales. The company shipped 4,750 Model S cars. Tesla says it now expects to record a first quarter profit after the stronger than expected sales performance and shares in the company shot up by 19% on Monday on the back of the news. Tesla also announced that it is shelving plans to produce a low cost variant of the Model S, citing lack of demand. The company has instead been focusing on building higher specification and higher profit versions of the car in a strategy shift that appears to be paying off.
Tesla founder and chief executive officer, Elon Musk, also used the social networking platform twitter to drop in a teaser announcement, stating that the company will soon unveil news that is "arguably more important" than these financial figures. Tesla had suggested as far back as January that this quarter would be profitable after exceptional items such as non-cash options and warrants were taken out of the equation. The company's focus on high end models has seen it build more cars with larger battery packs and longer ranges to address 'range anxiety' common in drivers of electric cars.
Such models, like the top of the range Tesla Model S Performance, retail at around $96,000 as opposed to around $60,000 for the entry level model. Tesla said that only some 4% of its customers were buying the basic model and as a consequence it was dropping this variant. The entry level car was to be supplied with a 40 kWh battery pack. Existing customers will now receive the standard 60 kWh batteries at no additional cost but will have their range and output limited to 40 kWh in an effort to protect sales of the more expensive models.
Tesla launched onto the Nasdaq stock market in 2010 and although it initially made heavy losses the figures have improved as deliveries of the Tesla Model S sedan increased into last year. CEO Musk hailed the financial results, saying: "There have been many car start-ups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting the electric car revolution." The news of first quarter profits for Tesla will be particularly welcome after a damaging few months when the car maker has had an unseemly spat with the New York Times over a negative review and lost a court case in the UK concerning another unfavourable review.
Posted by Edwin Miles on