Looking Back: How Tesla Surprised Everyone in 2013

For Tesla Motors (NASDAQ: TSLA  ) shareholders, 2013 was a dream come true. For Tesla shorts, it was a nightmare. As of this writing, shares have soared about 350% since the beginning of the year. That would have turned a $10,000 investment into $45,000 -- not bad at all. Led by the iconic entrepreneur Elon Musk, the company undoubtedly took the Street by surprise. What's the story?

Source: Tesla's official Twitter feed.

They didn't believe him
In 2011, Musk told the world Tesla would soon deliver 20,000 of the Model S per year, but the Street didn't believe him. The car hadn't even gone into production yet. Even when Tesla continued to insist in 2012 that demand for Model S based on net orders suggested deliveries of the vehicle will surpass 20,000 in 2013, the market demanded proof. In 2011, Tesla stock gained only 7%. Even in 2012, Tesla stock rose just 19%.

How in the world would Tesla go from selling a few hundred sports cars to 20,000 Model S in one year, investors wondered? How does Musk know demand for its new all-electric vehicle will be so robust? Tesla's goal was simply too big for the Street to wrap their minds around it. How could Tesla go from producing hundreds of Roadsters per year to producing hundreds of Model S vehicles per week?

But Musk kept his word. While the company missed guidance for Model S deliveries in the first two quarters of its availability because of production limitations, Tesla was easily on pace to meet its audacious goal by the first quarter of 2013, when it reported 4,900 Model S deliveries. 

Source: Data retrieved from quarterly SEC filings.

Though Tesla hasn't announced fourth-quarter results yet, it has guided to deliver 21,500 vehicles in 2013 -- all on an advertising budget of zero.

Big plans
But Tesla's big plans didn't stop at 20,000 vehicles. In 2013, Tesla revealed that it expected to reach an annualized rate of deliveries of 40,000 by late 2014, thanks to improving production and a rapid global expansion.

Even more, Tesla has been rapidly expanding its Supercharger network both domestically and internationally. No need for investors to worry about the required infrastructure for fully electric vehicles any more (at least the Tesla-branded ones); Tesla is taking care of this issue itself.

Then, of course, there is Tesla's expansion into China. With a plan to begin deliveries in the country in the first quarter of 2013, Tesla has already received hundreds of reservations for the Model S in the country, according to China Daily

The most important forward-looking driver for Tesla's stock, however, is Tesla's goal to launch its more affordable electric car in 2016 or 2017. Elon Musk has said that when Tesla ships this car, the company wants to be delivering hundreds of thousands of cars per year. This would make Tesla a major player in the automotive world.

Can Tesla deliver?
Once again, we're asking the same question investors were in 2011: Can Musk live up to his wildly bullish outlook? It may seem naive to believe Musk can deliver again just because he did in the past, but that's exactly what investors are betting on today with the stock trading at 10.7 times sales. 

Elon Musk isn't just any CEO. And Tesla isn't a typical company. The Model S and its long list of accolades is living proof that Musk & Co. can execute on levels beyond our expectations. While it may be tough for many investors to bet on Tesla at these levels, the company has at least proved that betting against it probably isn't the smartest thing to do.

They said it couldn't be done
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Read/Post Comments (8) | Recommend This Article (1)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 29, 2013, at 1:15 PM, deeageaux wrote:

    Nissan has sold 1M vehicles, Hyundai/Kia 1.16M vehicles, and Honda 1.39M vehicles in the USA alone YTD 2013.

    A few hundred thousand Teslas worldwide does not make Tesla a major.

    Approaching BMW's 1.8M sales worldwide does make it a player.

    But that will take a bit more time.

  • Report this Comment On December 29, 2013, at 1:25 PM, CrazyDocAl wrote:

    Tesla stock is one fire away from dropping back to where it was in 2012. The only surprise is the number of people who jumped on the stock and bid it up to unfounded highs. Looking at that graph I see trouble. Tesla is selling cars in more countries yet sales are just slightly above flat.

    The second warning sign is that the backlog before a car can start to be built is over. That's either pointing to a drop in demand or that production capacity has increased to the point where it's higher than demand.

    Tesla should get a boost once the model X is ready for the public. I'm sure the same wealthy buyers will line up to put one in their garage next to their S. If Tesla can release more details on their economy car, range and cost, and it meets expectations then 2014 could be a good year.

    Invest with caution.

  • Report this Comment On December 29, 2013, at 2:34 PM, deeageaux wrote:

    Tesla is selling in more countries but not many more units because it is constrained by the number of battery cells Panasonic makes. It is starving North America to feed Europe.

    A base Model S wait time is 4 months in USA and 9 months in Norway. Demand is not diminishing. They have just received a dispensation of sales tax on industrial equipment to build a second assembly line at the Freemont CA manufacturing plant.

    Panasonic will increase battery cell deliveries in 2Q 2014. This bottleneck should be opened until the Gen III-Model E car comes out in 2016-17.Look for sales of 40-60k units in 2014. A prototype of the Model E will be shown at the 2015 Detroit Auto Show.

  • Report this Comment On December 29, 2013, at 3:03 PM, lydercat wrote:

    In december, Tesla Model S was the most sold car in Norway.

  • Report this Comment On December 29, 2013, at 6:18 PM, apsley wrote:

    I'm all for electric cars, but it's not really clear to me how Tesla is going to build a $30K electric car which has any more range than a Nissan Leaf.

  • Report this Comment On December 30, 2013, at 3:59 AM, MichaelB wrote:

    Um, if a stock "soared about 350%" it would not "have turned a $10,000 investment into $35,000". $35,000 is the increase, we still have the original $10,000 so the value becomes $45,000. If you are going to use silly hypothetical calculations please get the math right.

  • Report this Comment On December 31, 2013, at 10:19 AM, OneHundredxFifty wrote:

    Model E is delayed until 2016, probably because of battery prices. Musk has realized that to get battery prices down he has to get the production volume up. They are looking seriously at building their own factory to double world production and take Li-ion down the learning curve.

  • Report this Comment On December 31, 2013, at 10:26 AM, OneHundredxFifty wrote:

    Some folks are buying into the press feeding frenzy over car fires. Typical press, first hype a story and sell advertising, then reanalyze and sell more advertising. This never should have gone out of control, Tesla = 3 car fires, rest of auto industry, nearly 200,000 car fires. The story, if there is one, is that people don't die in Tesla car fires.

    It is also worth pointing out that Tesla puts their money where their mouth is. They now have a warranty that covers the car in the case of fire unless you intentionally torch the thing.

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