Tesla Motors Inc (TSLA): Model S Rises to New Heights


Tesla Motors Inc (NASDAQ:TSLA)’s stock has been rising steadily over the past few months, and has even doubled in value in little less than a year, when the share value dropped to $120. Expectations remain high, as the firm looks forward to releasing the new Model X, while expanding into Europe and China this year. Yet Tesla’s main business is still focused on the U.S., where Model S deliveries have increased significantly.

According to the second quarter report released by Tesla Motors Inc (NASDAQ:TSLA), 7,579 Model S vehicles have been delivered out of a total production of 8,763 units. If the firm continues on this path, it will most likely reach its Model S sales target for 2014 of 35,000. These numbers are staggering for the new car company, which made its first ten deliveries in June of 2012 and has been ramping up production ever since.

The expansion of the Tesla Motors Inc (NASDAQ:TSLA) supercharger station network in the U.S., is one of the main reasons customers are lining up to purchase the Model S. Now that owners can charge their Model S all across the East and West coast, as well as cross-country, purchasing the electric vehicle is no longer considered an adventurous undertaking. Thus, the firm expects a similar trend in Europe and China once the network of supercharger stations is expanded. So far, Tesla has installed 47 stations in Central Europe and only 9 in China.

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The demand for the Model S is definitely at an all-time high, and thus, Tesla Motors Inc  (NASDAQ:TSLA) is mainly concerned with ramping up production. As stated by the firm in their second quarter letter to shareholders, “average global delivery wait times increased because our production growth was unable to keep pace with increased demand”. Hence, as markets remain under penetrated, Tesla is looking to achieve a production output of 100,000 Model S units by 2015.

As production and deliveries increase at such staggering rates, Tesla Motors Inc (NASDAQ:TSLA) is expecting to finally see some profit on their balance sheet. Second quarter results indicate a GAAP net loss of $62 million, yet while the focus remains on increasing production of the Model S and introducing the Model X, the company is otherwise concerned. For now, boosting production to keep up with demand, while expanding its supercharger station network, are the key to consolidating the company in the auto industry.

Disclosure: Pablo Erbar holds no position in any stocks or funds mentioned.

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