Tesla Motors says it earned a profit last month, the first time the Silicon Valley automaker has run in the black since its founding in 2003.
The company earned $1 million on $20 million in revenue in July after shipping a record 109 Roadsters. It attributed the profit largely to improved margins on the electric two-seater and a "surge" in orders for the car, which has a base price of $109,000.
"We achieved bottom-line profitability thanks to a tremendous amount of hard work by the Tesla team to improve quality, while simultaneously reducing costs on the Roadster," company CEO Elon Musk said in a statement. "This also shows there is a strong demand for the car... Moreover, customers know that in buying the Roadster they are helping fund development of our mass-market electric cars."
It's a significant development and big news for Tesla, but don't expect it to become a trend.
Most of that money rolled in after Tesla delivered cars customers had already placed deposits on. Although the company has, according to spokeswoman Rachel Konrad, seen a "surge" in orders for the Roadster and the higher-performance Roadster Sport (price: $127,500), it isn't likely to keep rolling cars out so quickly. Konrad says Tesla is "definitely on pace" to meet its goal of 1,000 to 1,200 cars a year but didn't say when that might happen. Tesla has so far delivered about 609 Roadsters since production started in March, 2008.
Konrad also notes that Tesla is dumping a lot of money into expanding its retail operation. Tesla already has showrooms in Menlo Park, Los Angeles, New York, Seattle and London. New stores will open in Chicago, Miami, Munich and Monaco by the end of September and in Washington, D.C. and Toronto by the end of the year.
More importantly, Tesla is investing heavily in the Model S sedan, which the company plans to begin selling in 2011.
"We are ramping up expenditures on Model S as we get closer to production, so it would not be surprising if we were not in the black in the future," Konrad said. "This is the normal development cycle of engineering-focused companies, after all."
The Department of Energy will loan Tesla $465 million to help develop the Model S drivetrain and retool a factory to build the car. The federal money cannot be used for things like marketing, so any money spent selling the car will come from Tesla's coffers.
So... getting back to Tesla's first-ever profit.
Konrad told us the revenue and net income data reflect generally accepted accounting principles -- meaning they're real numbers -- and everything was "audited by our Big Three accounting firm." She wouldn't tell us which one because, as a private company, Tesla doesn't have to. The $20 million in revenue does not include the deposits more than 1,500 customers have made on the Model S, nor does it include new deposits placed on Roadsters. It also doesn't include Daimler's $50 million investment in Tesla or any money from Uncle Sam.
"The revenue is primarily the result of new car deliveries and not some atypical one-time event," Konrad said.
Some of the revenue did come from Tesla's sale of battery packs and other technology to Daimler's budding Smart EV program, but Konrad wouldn't provide a specific figure.
Konrad said "relentless tweaking of the supply chain" helped Tesla improve the Roadster's margins. Two years ago, the Roadster's bill of materials -- the cost of every part needed to build a car -- stood at $145,000. The company has since brought that down to about $80,000, she said.
The company isn't disclosing specifics on those cost reductions but Konrad said Tesla has cut the cost of non-powertrain components by 20 percent and decreased the cost of the powertrain by 30 percent in the past nine months alone.
The company also improved margins a bit earlier this year when it effectively raised the price of the Roadster by charging thousands of dollars for items once offered as standard equipment. At the time, Tesla said the move was needed "to guarantee the viability of the company."
Photo of the Tesla Roadster: Jim Merithew / Wired.com
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