On the surface, it appears that the electric vehicle industry has had a rough go of it these past few years. Fisker Automotive dealt with a very public collapse. Sales of the extended range electric Chevy Volt have declined 11% since April 2012. Tesla’s Model S sedan received a beating in a New York Times review of its performance.
But things are looking up. The electric Nissan Leaf had a record-breaking month in March. And this week, Tesla announced that it’s profitable for the first time.
In a shareholder letter, Tesla CEO Elon Musk revealed that the company turned a profit of $15 million. Sales also received an 83% lift from last quarter, with $562 million in total revenues—a record for Tesla. The Model S also beat sales of both the Nissan Leaf (3,695 sold) and the Chevrolet Volt (4,421 sold) to become the best-selling EV, with 4,900 vehicles sold. Tesla has proven that top-notch branding can overshadow price in the EV world (the Model S is more expensive than both the Leaf and Volt), at least for now.
One important note from Tesla’s shareholder letter (hat tip to Quartz): 12% of Tesla’s first-quarter revenues came from selling zero-emission vehicle (ZEV) credits to manufacturers who haven’t reached California’s requirements for selling a certain number of zero-emissions vehicles. Musk writes: "We expect this to decline significantly in future quarters, as ZEV credits will only apply to about 1/6 of worldwide deliveries, versus roughly half of U.S. deliveries, and the price per credit has declined."
Nonetheless, Tesla expects its gross margins to hit 25% by the fourth quarter of 2013, proving that the Department of Energy investments in EVs aren’t all duds. As Tesla rolls out the Model S in Europe later this year and releases even more affordable vehicles—as the company has long promised—chances are high that its economic situation will continue to improve.