Tesla Motors Earns $26 Million in the 2nd Quarter—Thanks to the Government
Charts: Without subsidies, Elon Musk's electric-car startup wouldn't have rolled this far.
—By Maggie Severns
| Wed Aug. 7, 2013 11:49 AM PDT
Tesla Motors surprised Wall Street this afternoon, announcing second-quarter profits of $26 million on $405 million in revenue. Since it reported its first modest profit in May, the electric-car company cofounded by billionaire entrepreneur Elon Musk already had seen its share price more than double, and you can expect it to soar even higher when the markets open tomorrow. Many analysts, after all, were expecting Tesla to take a hit. But so far, the company's profits have relied on government subsidies and initiatives.
Emissions mandates, tax breaks, research subsidies, and a low-interest federal loan have helped Tesla prosper.
Tesla's own accomplishments are impressive. The company, founded in 2004, is selling its all-electric cars as fast as it can produce them, even though the baseline price for a Model S sedan is nearly $70,000. Car and Driver says the Model S is possibly the best car it has ever tested. Musk has built a successful company after years of scraping by low on funds while sinking money into researching and developing amazing cars.
In January 2010, as Tesla was developing the Model S, it received a $465 million dollar loan from the Department of Energy (DOE). That's not to mention other, less direct subsidies, like the millions of dollars in subsidies in Japan that helped Panasonic develop the lithium-ion batteries that are at the heart of every Tesla car. Tesla's modest first-quarter profit relied on $68 million from zero-emission-vehicle (ZEV) credits it sold to other, less environmentally friendly car companies under a California emissions mandate. There's also the $7,500 federal tax break for people w