Tesla Motors, widely considered one of the most successful clean tech start-ups the world has seen, is ready to post its first profit as a listed company.
The electric car maker released its first vehicle in 2008 and is now looking to report black numbers on the success of its second car – the Model S.
The news has been trumpeted by the company’s chief executive, Elon Musk, who says a quarterly profit can be expected in the second half of 2013, something to toast at any celebration for its 10-year anniversary (it went public three years ago).
"Now, the tough thing for Tesla is to actually make a profit for the first time. That's, I think, when you start being a real company," he told reporters over the weekend.
"I'm hoping we'll have a profitable quarter this year. Shame on us if we can't achieve that."
Musk – who co-founded PayPal and SolarCity – first flagged the prospect of an imminent quarter of profit via Twitter in December.
“(I) am happy to report that Tesla was narrowly cash flow positive last week. Continued improvement expected through year end,” he told his 120,000 followers.
The company reportedly recorded one month of profit back in July 2009, before it listed on the NASDAQ at $17 a share, providing a valuation of around $2 billion. Now the shares are over $33 and the company is valued just shy of $4 billion. Not bad, especially in the context of other clean tech stocks, which have largely had a tumultuous few years.
Plan bearing fruit?
Musk’s long-held plan for Tesla was to start with an electric sports car to attract the early adopters and then move to more affordable versions as quickly as possible. The aim isn't to produce the world's best electric car, it is instead to mass produce the world's best car (which will just happen to be electric).
It has always been a long-term strategy and to-date it would be a harsh person to say he isn’t on track with this blueprint.
Looking back to the Roadster, the limited number produced meant it had the exclusivity to match its $100,000 price tag.
It attracted plenty of star power with actors Brad Pitt, George Clooney, Leonardo DiCaprio, Matt Damon and Cameron Diaz as well as Google founders Larry Page and Sergey Brin all seen driving around in the car. You couldn't pick a much better core of early adopters.
The company then shifted its attention to production of a more affordable sedan and it has the $US59,900 (pre tax credit) Model S to show for it. The EV has won numerous awards, not just in green car categories, and has reached the target annual production rate of 20,000 a year.
While it has done well to set the base, Tesla now has the most challenging task ahead: to get the cost of the electric car to a level that attracts a wider following.
That will start with the Model X, a luxury crossover built on the Model S platform, which is on track for a late-2014 launch. The company will then take the next step, with a third generation vehicle at a cheaper price point of under $35,000.
The doomsayers – of which there have been plenty – have been steadily retreating in recent months, particularly obvious by the reduction of interest from short sellers in the company's stock. But it will be the release of the third-gen vehicle that will determine whether the doubters were right, or incredibly wrong.