|Carmudi examines the future of Tesla Motors and how the Brand Fills a Serious Need|
According to Reuters, Tesla Motors takes a $4000 loss on every S model it sells. With just $1.15 billion on hand as of June 30, down from $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 $47 million, Tesla Motors still increased revenue by more than 50% in Q1 of 2015. Even more impressive is Tesla’s stock, which is 70% higher than two years ago, and 8% 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 $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 $4000 on each Model S it sold. But, the $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 $47 million was invested into the future of the company.
Growth of Demand for EV’s worldwide and Future of Tesla Motors
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 $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 $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% of them,” said Subir Lohani, Managing Director at Carmudi Philippines.
“In Asia, we will see more electric vehicles on roads by the end of 2017. Increased government support for research and development and tax incentives for electric vehicle buyers will pave the way for Tesla and other electric car manufacturers. In fact, BAIC, a chinese automobile company recently announced it plans to make up to 3,000 electric vehicles for the Asian auto market next year,” adds Lohani.