Tesla Is About To Turn Its First-Ever Profit — Here’s How It Got There (TSLA)

By admin on February 20, 2013

Tesla Worldwide Debut of Model X

Tesla Motors just announced its fourth quarter financial results, and it reported a net loss that was a bit wider than expected.

But importantly, the company reached its production goal of 400 Model S cars a week, which it needed to hit to break even.

And now, Tesla even expects to generate “slightly positive” net income in Q1 2013.

This would be its first-ever profitable quarter since its IPO.

Here’s a look at how the company got here.

Tesla Motors was founded in 2003 by five Silicon Valley entrepreneurs.

Tesla was founded by Marc Tarpenning, JB Straubel, Ian Wright, Elon Musk, and Martin Eberhard. The five collaborated after they tried to commercialize the T-Zero prototype electric sports car created by AC Propulsion.

When he was in college Elon Musk had said there were two important problems worth studying, one was how to make transportation environment friendly and the other was how to colonize another planet.

The company name after electrical engineer Nikola Tesla and aimed to “accelerate the world’s transition to electric mobility with a full range of increasingly affordable electric cars”.

Source: Tesla / NPR

The Tesla Roadster prototype was introduced to the public in 2006 and general production began in 2008.

Tesla raised $ 60 million and spent about $ 25 million developing its two-seat Roadster vehicle that sells for $ 109,000. The Roadster goes from zero to sixty miles in four seconds and can go 250 miles on a single charge.

The Roadster came 10 years after General Motors introduced its two-seat electric car the EV-1, which GM eventually withdrew because it had a 100 mile limit on one charge.

Source: The New York Times / Reuters

Tesla has maintained that it plans to get to the mass market by selling it to rich people first and kicking off production.

Martin Eberhard former CEO of Tesla was quoted by The New York Times:

“According to Mr. Eberhard, the way to get a new product into the mass market is to sell it to rich people.

“‘Cellphones, refrigerators, color TV’s, they didn’t start off by making a low-end product for masses,’ he said. ‘They were relatively expensive, for people who could afford it.” The companies that sold those products at first, he said, did so “not because they were stupid and they thought the real market was at the high end of the market,’ but because that was how to get production started. His company and others that have tried electric cars, he said, are too small to produce by the tens of thousands anyway.”

And Elon Musk has always maintained that its goal is to create a mass-market electric vehicle that could be as cheap as $ 20,000 in third generation cars.

Until 2008 most car sales were done in person, over the phone or via the internet.

Source: The New York Times

See the rest of the story at Business Insider

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