Tesla Motors (NASDAQ:TSLA) will release its quarterly report tomorrow, and after such an impressive run in its stock, you might expect that the company would be wildly profitable. Yet even though analysts all expect the Tesla earnings report to come in with a small loss for the June quarter, the huge ramp-up in revenue has given investors hope that in the long run, the innovative carmaker will produce the profits to justify its now-pricey stock.

Tesla has combined two important subclasses of the auto market in one offering, with its Model S appealing both to luxury-car aficionados and environmentally conscious drivers seeking to be on the cutting edge of electric-vehicle technology. Initially dismissed as a niche offering, Tesla has gained traction as it explores how best to tap what could be huge mass-market demand if it can come out with a car in a more reasonable price range than the Model S. Let's take an early look at what's been happening with Tesla Motors over the past quarter and what we're likely to see in its quarterly report.

Stats on Tesla Motors

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$383.4 million

Year-Ago Revenue

$26.65 million

Earnings Beats in Past Four Quarters


Source: Yahoo! Finance.

Could Tesla earnings come in positive again this quarter?
Analysts have marked down their views on Tesla earnings substantially over the past few months, cutting initial estimates for a break-even June-quarter and their full-year 2013 predictions by the same $0.17 amount, and reducing full-year 2014 consensus by double that amount. Yet the stock has pushed ever-higher, posting gains of 167% just since early May.

Tesla has proven the naysayers wrong in the past. Just last quarter, the company posted an unexpectedly large profit, tripling expectations and putting itself in the black for the first time in its 10-year history. With 4,900 revenue-producing vehicles that customers fully paid for and took delivery on, Tesla also kept its partnerships with Toyota (NYSE:TM) and Mercedes-Benz as revenue generators as well. Moreover, sales of California tax credits helped bolster profits as well. Tesla already said that losses are likely in the June quarter as the company launches the Model S in Europe, but that has only heightened excitement about the car and the stock, as the company claimed 8.4% market share of the U.S. luxury market in the first half of 2013.

But Tesla has its sights on an even larger audience. With plans for a new sedan and compact SUV that would weigh in with a range of 200 miles and a much lower $30,000-$35,000 sticker price, Tesla hopes to be able to scale up its operations in order to weather the inevitably slimmer margins that a mass-market car would produce. Rivals Ford (NYSE:F), Honda (NYSE:HMC), and Nissan have had relatively little success in selling their own low-end electric vehicles, but part of their challenge is that their ranges are much more limited at 120 miles or less. Ford is investing heavily in the electric side of its business, so it could pose a bigger threat to Tesla in the future.

As Tesla's share price has climbed, so too have the crosscurrents in opinion about the stock. Goldman Sachs temporarily crushed the stock last month with a price target well below where the stock was trading, but Tesla rebounded quickly after the pronouncement as other more bullish prognosticators weighed in. High valuations leave Tesla stock especially vulnerable to setbacks if they come, but in their absence, shares could easily keep climbing higher from here.

In the Tesla earnings report, watch for news about the coming Model X SUV as well as Tesla's plans for production-capacity expansion and mass-market offerings. With so much potential, it'll be essential for CEO Elon Musk to focus his attention on the most lucrative strategies in order to justify the huge amount of confidence that investors have put in him.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Ford and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.