The luxury car maker Tesla (TSLA) is on an uptrend. There is no other company that provides electric vehicles in the luxury segment. The success of this automaker is quite evident with its one-year return of 80% for its investors.
Tesla reported its second-quarter results, which was way ahead of Street's estimates. In fact, it is not the first time the company has over-delivered. It beat the estimates in the last five consecutive quarters. Let us explore the quarter in details.
Into the results
Driven by higher demand for its products, revenue stood at $858 million, higher than the year ago top line of $552 million. Also, this number is higher than $810 million, expected by analysts. Higher deliveries of its Model S sedan led to a growth in sales. Tesla delivered a total of 7579 vehicles of Model S and produced a total of 8,763 vehicles, during the quarter. The deliveries were higher than the company's own estimate of 7,500 vehicles. Number of vehicles delivered is indeed an important metric and an uptick in this figure shows growth prospects of the company.
Even the bottom line did well. Adjusted earnings for the quarter stood at $0.11 per share, as compared to the expectation of $0.04 per share. Therefore, the carmaker managed to outperform the consensus in all the key metrics reported.
Road ahead
Further, Tesla has some amazing plans for the future, which will make investors even more confident about the company. First, it has entered into partnership with Panasonic (PMPC), the battery maker, to participate in setting up Gigafactory, the world's largest battery factory in the U.S. This lithium ion battery factory will produce battery cells for 500,000 electronic vehicles on an annual basis. This initiative requires an investment of $5 billion and a total of 6,500 employees.
Also, the luxury carmaker is in plans to make a mass market electric vehicle in the next 3 years. This model, known as the Model 3, will be priced around $35,000 and will be 20% smaller in size. The affordable car will cater to the middle income group people, who are unable to buy expensive Tesla cars. The upcoming Gigafactory will help in this endeavor.
Another new model, called Model X, is expected to hit the market in the spring season of 2015. This news has brought much excitement to people who are eagerly waiting for the new release.
The automaker is also expanding its wings as it gets into new markets. It plans to expand in China, which is the largest luxury car market. This should help in boosting Tesla's revenue. It will also be expanding to Japan in the coming months, which is an important market as well. Further, demand for model S is already on the rise in the existing markets of the U.S. and Europe.
Therefore, the company is confident about its sales outlook of 35,000 vehicles, during the year. Moreover, Tesla expects to produce 9,000 cars and deliver a total of 7,800 cars in the current quarter.
To end up with
Tesla is the leader in the luxury electric car market with very few players matching up to its standards. In fact, it's been 7 years when the company launched a car with 250 mile battery range and no other company has been able to reach the same level since then. The luxury car maker is doing well and is beating its benchmarks each time. Moreover, with the new cars, slated to be launched, and the new Gigafactory on the cards, Tesla looks like a great pick for the long run.
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