According to Reuters, Tesla Motors takes a US $ 4000 loss on every S model it sells. With just US $ 1.15 billion on hand as of June 30, down from US $ 2.67 billion a year ago, Tesla Motors has attracted some concern from investors and analysts. Carmudi examines the future of Tesla Motors and the growth of demand for electric vehicles worldwide.
Despite Tesla’s operating loss of US $ 47 million, Tesla Motors still increased revenue by more than 50 percent in 1Q of 2015. Even more impressive is Tesla’s stock, which is 70 percent higher than two years ago, and 8 percent ahead of its level on January 1. Manufacturing the Model S is actually profitable, with margins among the best in the entire auto industry. So why did we see headlines claiming that Tesla Motors is losing US $ 4000 on each S Model it sells?
By simply spreading their operating across the volume of cars that Tesla Motors sold during the quarter, it may appear that Tesla lost US $ 4000 on each Model S it sold. But, the US $ 47 million was not just spent on building and delivering Model S vehicles. We must remember that Tesla is still in startup mode and some of the US $ 47 million was invested into the future of the company.
The future looks bright for Tesla and for other electric car manufacturers. And it isn’t just America that sees demand. Emerging markets will provide a massive opportunity for the brand. A growing middle class, coupled with the abundance of millennials, means more sustainability-conscious motorists who are willing and able to switch from owning gas-guzzlers to luxury electric-powered vehicles such as Tesla’s Model S.
The global electric vehicle market is projected to reach a staggering US $ 271.67 billion by 2019, on sales of 64.4 million units. Tesla is certain that electric cars will shape the future of the auto industry. The company plans US $ 1.5 billion in capital spending this year, mainly to launch the Model X, a battery powered, eco-friendly sports vehicle with batmobile-like doors.
“The eco-friendly vehicles which are listed on Carmudi are mostly hybrid and almost all of these hybrid vehicle listings are based in Asia, that’s more than 90 percent of them,” said Carmudi Sri Lanka Managing Director Firaz Markar.
He further added, “In Sri Lanka, we see great acceptance of the electric vehicle range. The wave initially started with the Nissan Leaf showing great sales growth, following on to importers bringing down the BMW i3 and the Tesla range of vehicles. While the latter two would place itself at a higher price range than the leaf, the whole range of electric cars in Sri Lanka are very competitively priced in comparison to its petrol counterparts, thanks to reduced import taxes. We expect sales of electric cars to continually grow, as long as market conditions remain suited, with the influx of a greater range of vehicles in the future.”
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