The numbers: In the black, baby. Tesla Motors turned its first profit—$11.2 million—in its 10-year history as the Silicon Valley automaker ramped up production of its Model S luxury electric sports sedan. Tesla had lost $89.9 million in the fourth quarter. Sales jumped 83% to $562 million from the previous quarter as Tesla built more than 400 vehicles a week, for a total of 4,900 for the quarter.
The takeaway: Experience begets savings. Gross margins doubled to 17% as Tesla increased production and cut inventory costs and expenditures on raw materials. The company expects margins to improve to 25% by the fourth quarter of 2013. Tesla starts delivering the Model S to Europe in the third quarter and projects global demand will hit 30,000 cars. Tesla chief executive Elon Musk said Europe could account for 10,000 sales with another 5,000 cars going to Asia.
What’s interesting: Tesla made $68 million—12% of its first-quarter revenues—from selling not cars, but zero-emission vehicle (ZEV) credits to other automakers that haven’t met a California mandate to sell a certain number of carbon-free cars in the state. But that party won’t last. Musk said ZEV credit sales are expected to evaporate by the fourth quarter, as the credit market becomes saturated and more of the company’s cars are sold overseas. That might make profitability harder to maintain.
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