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Tesla earns first profit, Model S wins '99% perfect' rating

Wall Street brokers left facing financial hole

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The stock of space-faring Elon Musk's more down-to-earth business of selling Tesla electric cars is heading skywards after the company reported its first-ever profit and saw its Model S sedan get a stonking 99 per cent approval rating from the testers at Consumer Reports.

Tesla's stock is currently up over 25 per cent after the company's quarterly results showed it turned a $11.2m profit after losing $89.9m the same quarter last year; revenues were up to $561.8 million from $30.2 million over the same period. Margins on the car are rising monthly, and Musk said should hit 25 per cent by the end of the year. The company spent $200m in capital expenditures (aka capex) in the last three months.

Nearly 5,000 cars were sold in the quarter, and Tesla said sales are expected to go over 20,000 by the end of the year, with a predicted annual demand of 30,000 cars a year. Tesla's Model S is now the top selling US electric car, ahead of GM's Chevy Volt and Nissan's Leaf. Cars are also being shipped to customers in Europe.

"We're profitable despite spending a lot of money on building out our network of user centers and charging Supercharging stations needed to build out a service network," Musk said at a Q&A call with analysts. "That's something that's going to be an ongoing cost but one that's needed to build out a service network.

Profits might possibly have been higher had The New York Times not published an error-strewn review of the Model S, provoking an angry war of words with Musk. At the time, Musk claimed the review cost the company $100m in lost revenue, so the news on Thursday that Consumer Reports testers had awarded Tesla's Model S a score of 99 out of 100 points, outscoring any other car in its rankings, should be worth a buck or two.

"We're never seen anything like the Tesla Model S," enthused Jake Fisher, head of auto testing for Consumer Reports. "This car performs better than anything we've ever tested before – not just the best electric car, but the best car."

The $89,675 test model is the quietest car the testers have ever tried and is reasonably nippy, making it from 0-60mph in 5.6 seconds. The low center of gravity that comes from having 85Kwh-worth of batteries on the bottom of the vehicle also means it handles well while cornering at speed, Fisher reported.

The NYT's low opinion aside, the response of the the rest of the motoring cognoscenti has been very positive. Both Motor Trend and Automobile Magazine named the Model S as their car of the year. Sergey Brin is also a fan, and was spotted recently in a pimped-out pink Batmobile Model S.

So far, Tesla shares are up over 60 per cent on the year – which is good news for Musk's bank account, but will also provide the tycoon a considerable amount of schadenfreude. Since the start of the year, Tesla's stock has been suffering from an attack of short-selling by Wall Street, with traders betting on a lowering price and posting markers for a reported 30 million Tesla shares a month.

Last month, Musk took to Twitter to remind those whiz-kid financial types that they might be wrong, tweeting "Seems to be some stormy weather over in Shortville these days." With the stock up by another quarter since then, Musk must be feeling very good indeed, and a few traders might be shown the door. ®

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