A View from Kevin Bullis
Tesla’s Explosive Revenue Suggests a Brighter Future
The maker of the Model S is cranking out cars and may be on track to turn a profit.
Last year Tesla Motors struggled to meet manufacturing targets for its only production car, the Model S, and it recently got hit with a negative review in the New York Times after a journalist ran out of power during a test drive (see “Tesla Blames New Delays on Production Difficulties” and “Musk-New York Times Debate Highlights Electric Cars’ Shortcomings”).
But things appear brighter now. Tesla announced today that its revenues have jumped by 500 percent and that it’s now making enough cars per week to deliver 20,000 of the vehicles by the end of this year. It also said it expects to make a small profit next quarter. Based on its gross margins, it seems that Tesla is now actually making its cars for less than it’s selling them for, rather than losing money on every one it makes, as had been the case previously. Improved productivity and lower costs for parts are helping. But when you factor in all of the company’s costs, including R&D and administration, the automaker still lost money—about $90 million.
Tesla says it now has 15,000 orders for the car, probably helped by receiving major awards and being featured on the cover of plenty of magazines. Who knows? The negative review and the dust-up that followed probably helped, too, if only to draw attention to the company.