All eyes are on Tesla Motors and whether the companies sales live up to expectation. Tesla has made a big bet they can sell 20,000 electric luxury cars a year when the likes of Nissan and General Motors are struggling to sell much more modest priced electric cars. On Sunday evening (March 31, 2013), Tesla Motors announced that sales in the 1st quarter 2013 had exceeded the previous estimates, and that the company was amending its guidance to shareholders that Tesla would be fully profitable in Q1 2013.
For fiscal year 2012 Tesla Motors ran a loss of $396 million after earning $386 million in revenue for the year. Shifting from that steep of a loss to profitability in one quarter rests on the fact that the factory is in full production, and stayed in full production all through the first quarter of 2013.
During the first quarter of 2013, the company claims sales exceeded 4,750 units while previous guidance had been sales of 4,500 units. This is an extra 250 or so Model S’s sold during Q1, representing extra revenue. Previously Tesla management said that, at full production, the factory would build 400 Model S’s per week. For at least 3 weeks during the first quarter, Tesla sustained over 500 deliveries per week.
Because sales were better in Q1 than expected, the company predicts that Q1 financial results will show that, for Q1 2013, the company will be fully profitable on both GAAP and non-GAAP basis.
All through 2012 Elon Musk had predicted Tesla Motors would quickly become profitable once sales and manufacturing began in earnest. Specifically, that Tesla would reach cash-flow-break-even on sales of just 8,000 Model S’s per year. When Musk said this at the June 2012 shareholders meeting, they had over 10,000 orders in hand and an expectation of being able to manufacture 20,000 Model S’s per year. At the end of 2012 the number of reservations stood at over 15,000 and the company had delivered 2,650 Model S’s to customers.
In other words, Musk claimed repeatedly in 2012 that Tesla was pretty much assured of reaching cash-flow-break-even for 2013, and that if sales would reach a level near the peak production level (20,000 cars a year) revenue would be well above the cash-flow-break-even level.
During 2012 Model S production began slow in June 2012 with a few cars produced a week. The production rate ramped up throughout the year as the manufacturing team worked through the processes. Before the end of 2012 they reached the 400 cars/week production level.
“I am incredibly proud of the Tesla team for their outstanding work. There have been many car startups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution,” said Elon Musk, Tesla Motors co-founder and CEO. “I would also like to thank our customers for their passionate support of the company and the car. Without them, we would not be here.”