Will Tesla Motors Continue Improving in the Long Run?
After a long struggle, Tesla Motors (TSLA) had first reported profits in 2013. It has gained real momentum since it has launched Model S. Sales of this model in 2013 were 22,477 and in 2014 the number increased to 31,655 units in Europe and North America combined. In the first quarter of 2015 itself, Tesla has sold 10,030 units of Model S, setting a higher pace of growth.
Although Tesla Motors is growing strong in North America, it is not doing that well in the rest of the world.
In the U.S. though, the company's gross profit is growing at an impressive pace. It has hit the 25% mark as compared to 22% in the fourth quarter of 2014. This phenomenal growth can easily be attributed to the growth in the sales of Model S. Model S has sold 56% more in the first quarter of 2015 than in the same quarter last year.
Tesla Motors has a full year target of 55,000 deliveries this year, which would be a whopping 74% higher than what it made last year. This formidable task still seems achievable given the fact that the delivery of Model X is expected to start in the third quarter of 2015.
Tesla's first production vehicle was the Roadster. It started selling in 2006. It was the first car in the US which was suitable for highways because it could travel more than 200 miles per charge. Its base price is above $100,000. It has been upgraded quite a few number of times but ultimately discontinued.
The Model S was the next car launched by Tesla in 2012. This model is the current generation model and is well received in advanced markets like the U.S. and Europe. It has topped the charts in Norway among all the big names of even the internal combustion engine cars. In the U.S., it is a hit in the luxury sedan category, beating even the likes of the Mercedes-Benz S-Class, the BMW 7 Series, Lexus LS, Audi A8 and Porsche Panamera.
Tesla Motors had unveiled Model X in Feb 2012 itself and orders for deliveries were taken in 2013. But now, the Model X is said to meet their buyers for the first time in the 3rd quarter of 2015.
The next in line is Model 3 to be launched in 2016. It is expected to be priced at $35,000 without government incentives. This is the first Tesla model which is expected to drive the company's growth in the Asian markets like India and China owing to its affordable price range.
There is immense competition in U.S. even in the electric vehicle market. The US being the biggest economy in the world, all global players want to compete over here. To overcome the competition, Tesla is making improvements to its product portfolio.
For example, Tesla is already in the process of addressing the cost issue by trying to bring down battery costs. It has hired John Dahn of Dalhousie University for this purpose. Tesla also aims at doubling the distance range of its vehicles by the use of advanced battery technology. Tesla has 55 retail outlets in North America, 24 in Europe 4 in Asia which it would like to improve soon. It also plans to significantly increase the number of supercharging stations in the U.S.
Tesla Motors is making smart moves to improve its business. The company's financial performance has started improving of late as it is gaining traction with customers. Hence, I think Tesla is a good investment for the long run that investors should not miss.