Musk’s fortune soars as Tesla beats estimates
Solid sales of luxury electric car reported
Elon Musk’s fortune soared $570 million Friday as shares of Tesla Motor Inc., the electric car company he co-founded in 2003, rallied 14 per cent after posting second-quarter results that surpassed analysts’ estimates on a surge in Model S sedan deliveries.
Musk, who also runs rocket maker Space Exploration Technologies Corps., known as SpaceX, and is chairman of solar-power provider Soler-City Corp., has a net worth of $7.7 billion, according to the Bloomberg Billionaires Index, up more than 220 per cent yearto-date. He’s the world’s 162nd richest person. Much of his fortune was created in the 1990s through online publisher Zip2 and payment system X.com.
Tesla Motor Inc. on Wednesday reported an operating profit of 20 cents a share, including 15 cents related to a leasing program. Even without that provision, results exceeded the average of 10 analysts’ estimates for a 20-cent loss, according to data compiled by Bloomberg. On its operating basis, Tesla said it will make money all year, even as it expands to Europe and Asia.
“He’s very clearly managing all the moving parts that you have to manage to put together an effective car company,” said Karl Brauer, an analyst with Kelley Blue Book in Irvine, California. “For the people who can afford those cars, this car is very effectively lining up with their needs: an attractive, premium-looking and feeling, functional, all-electric car.”
Model S deliveries totalled 5,150 in the quarter, topping the company’s target of 4,500, and Musk said Wednesday that an annual selling rate of 40,000 by the end of next year looks “pretty safe.”
Tesla said it expects to post operating profits and generate cash every quarter in 2013, even excluding sales of green-car credits to other automakers.
“He’s proving his critics wrong,” Jack Ablin, who helps oversee about $66 billion as chief investment officer of BMO Private Bank in Chicago, said by phone.
“He’s delivering on the top line, he’s selling more product. He’s able to extract a premium price for an electric car.”
Tesla’s Model S, priced from $69,900 before a $7,500 tax credit, received the highest rating ever from Consumer Reports, which praised its sporty handling and luxury interior. Musk said the sedan is winning customers who had owned Toyota Motor Corp.’s Prius and Daimler AG’s Mercedes-Benz E-Class. Toyota and Daimler are investors in Tesla and buyers of its battery packs.
The company’s Model X sport utility vehicle remains on track to begin sales late next year, Musk said, adding that its development is “swiftly rising” among the company’s priorities.
The SUV will be priced about the same as the Model S, he said last month in a post on Twitter that has since been deleted.
Beyond that, Musk said he has “high confidence” that Tesla will be able to produce a more affordable car with a 320-kilometre range for about $35,000.
Tesla began delivering the first Model S sedans to customers in Europe this week and is preparing to export to Asia late in 2013.