“Is there a legitimate market for a $70,000-plus luxury electric car?”
Tesla Motors, the California-based electric vehicle pioneer, is expected to report a profit for the first time in its history, but the Financial Times Lex column wonders if this will last.
Tesla reported that it delivered 4,750 of its Model S cars in the first quarter, ahead of its forecast of 4,500, and that as a result it would ring up its first profit.
Analyst pointed out that the first models to be delivered were all premium versions with the biggest and most expensive battery packs, but as production cranks up the profit mix is likely to be less rich.
“Is there a legitimate market for a $70,000-plus luxury electric car?” asked Lex.
Lex isn’t sure, although it believes that Tesla’s target of 35,000 Model S sales will be helped by marketing campaigns in Asia and Europe.
But as the Tesla share price rockets, investors worry that the company may seek to raise more money from shareholders to fund its future projects. Even Tesla owner Elon Musk, of PayPal and SpaceX fame, concedes that some question the viability of electric car companies. Musk recently pledged his considerable personal fortune to back up leases of his cars to U.S. buyers to convince waverers.
“There is plenty of time for Tesla’s shares to plunge back down to earth,” said Lex.
Neil Winton – April 15, 2013
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