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Tesla recharges the battery-car market | The Economist

It has not been a good year for the electric-car industry, considering the bankruptcy of little Coda and the all-but-certain collapse of the once-promising Fisker Automotive. Even well-established carmakers such as General Motors and Nissan have been struggling to entice buyers (though Nissan’s Leaf battery car has begun to develop a little bit of momentum after missing its sales target for the second year in a row).
So it is perhaps no surprise that 42% of the shares in Tesla Motors, a maker of electric cars based in Silicon Valley, are now held by short-sellers. They got a rude awakening, however, when the ever-optimistic Elon Musk, Tesla’s boss and the man behind the Space X commercial launch and other entrepreneurial feats, gave word that after ten years in the red, his start-up had turned a profit of $11.2m in the first quarter on unexpectedly strong demand for its new Model S sedan (pictured above). The results were well above the forecasts of even the most optimistic analysts; Tesla made a profit despite repaying $13m of the $465m it has borrowed from America’s Department of Energy.

All 5,000 of the battery-electric vehicles Tesla produced during the first quarter were sold in the United States. But as it gears up to expand its overseas markets later this year, Mr Musk is signalling that things could get even better. The company now forecasts that it will produce 21,000 sedans in 2013, a 5% increase over its initial estimate, and anticipates shipping 5,000 to Europe and another 1,000 to Asia.
In a letter to shareholders, Mr Musk noted that a “stabilised” manufacturing operation has helped reduce the number of man hours needed to produce a vehicle by 40% since the end of last year. Just as importantly, customers have been opting for the more expensive versions of the Model S, including one with a range of almost nearly 300 miles (480km), more than three times that of most of its competitors, including Nissan’s Leaf. Tesla has now decided to drop the basic model of its sedan.


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