Tesla Motors, Inc. Is Just Getting Revved Up

Tesla has guided for vehicle deliveries to increase 55% this year, but next year that rate may accelerate to 114%.

Mar 22, 2014 at 11:11AM

In 2013, Tesla Motors (NASDAQ:TSLA) sold 22,500 vehicles. The company expects that number to grow to 35,000 in 2014, up 55%. But it's in 2015 that Tesla's deliveries may really ramp up. In fact, it's reasonable to assume Tesla could sell 75,000 vehicles in 2015 -- more than double its 2014 deliveries.

Tesla Plate Levi

Model S. Photo by Levi Sim, used with permission.

How Tesla gets to 75,000 annual deliveries
The logic is fairly simple.

First of all, it's crucial for Tesla investors to keep in mind that not only is Tesla limited by supply and not demand, but also that Tesla hasn't spent a dime on advertising for its Model S. Even more, Tesla says that it currently has no plans to initiate any paid advertising in the future, either. Obviously demand issues aren't a likely near-term issue for the company.

Second, investors should also note that Tesla is only just beginning its global rollout. About 20,000 of its 22,500 deliveries in 2013 were likely in North America. But Tesla's global ambitions shouldn't be underestimated. Its rapid Supercharger network expansion in Europe foreshadows Tesla's plans to deliver vehicles in large volumes overseas. Further, Tesla has said it will begin deliveries in China this spring. 

Given these assumptions, the path to 75,000 vehicles is straightforward. It begins with this excerpt from Tesla's fourth-quarter letter to shareholders.

For the year, Model S was the top selling vehicle in North America among comparably priced cars. Nonetheless, we believe there is room to improve in 2014 as we complete the Supercharger network and enable vehicle service almost anywhere in North America. The potential in Europe and Asia is even more significant. Towards the end of the year, we expect sales in those regions combined to be almost twice that of North America.

This means that Tesla's annual rate of deliveries in North America of 20,000 is likely to increase, and that sales in Europe and Asia combined should reach a rate of at least 40,000 vehicles per year by the end of 2014. That gets us to Tesla's annual rate of deliveries going into 2015 at 60,000 plus.

From here, we factor in the Model X 2015 potential. Tesla says it will begin volume deliveries of the SUV by the Spring of 2015. Assuming Tesla could match Tesla's 2013 Model S production levels for the Model X after volume deliveries begin, 15,000 Model X deliveries is a sensible number to latch on to.

Model X

Model X. Source: Tesla Motors.

Combining Model S potential with Model X, we arrive at our figure of 75,000.

Fast-growing companies are hard to value
If Tesla deliveries do follow this path, Tesla's 2015 year-over-year delivery growth rate will actually accelerate from the already robust rate Tesla has guided for in 2014. It's exponential patterns like these that make valuing stocks like Tesla so difficult. If Tesla can grow sales by 50% this year and more than double deliveries in 2015, what can investors expect in 2016 and beyond?

This impressive trajectory should keep Tesla investors holding onto shares despite a seemingly wild valuation. Tesla's monstrous growth likely won't be slowing soon. Two major catalysts for the company sit on the horizon: Tesla's third-generation lower-cost vehicle that Tesla intends to launch in 2017, and the company's planned Gigafactory for producing lithium-ion batteries at unprecedented scale.

Find out why this investors is putting six figures into one stock
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

Daniel Sparks owns shares of Tesla Motors. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers