Tesla Motors, Inc. Is Just Getting Revved Up

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.

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. 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.

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Read/Post Comments (10) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On March 22, 2014, at 11:48 AM, jameshall69 wrote:

    Do you ever get bored of pumping up this stock? Do you work for Tesla or are you just long the stock? You constantly publish poor quality hype articles, or inarticulate videos rambling on about this over blown, bubble stock. Take a break.

  • Report this Comment On March 22, 2014, at 12:12 PM, NavyChum wrote:

    James - if that's the way you feel, it's hard to understand why you read the articles, view the videos, and then even take the time to comment. If the stock drives you nuts, ignore it!

  • Report this Comment On March 22, 2014, at 12:13 PM, drax7 wrote:

    GM is such great value, but now has to recall 1.6 million cars, not to mention the collateral damage, dead people.

    Again a pile of garbage that wants to compete against tesla.

    That leads me to believe that

    Tesla's technological lead is insurmountable if GM is the competition.

    Tesla should trade at a multiple of GM's value, even if it only produces one car.

    No wonder the CEO resigned and advanced a woman to his position, he was looking for sympathy.

  • Report this Comment On March 22, 2014, at 12:18 PM, TMFDanielSparks wrote:

    @jameshall69,

    This article doesn't even discuss the stock -- only the underlying business. These figures are already priced into the stock, so it's not as if these estimates could pump it anyway. The stock is already priced to get to 500 thousand vehicles per year by 2020. So, I would say anyone who believes otherwise would be the outlier, since the company's bullish future is already voted in based on the market capitalization the market has awarded the stock.

    If you ask me about buying the stock today, I would say it's too risky. Holding? I might say yes.

  • Report this Comment On March 22, 2014, at 2:18 PM, FLLMTR wrote:

    Bloggers seem to forget that the automotive market is cyclical. Tesla may be a flavor of the month but another vehicle may be more popular next year.

    The only way Tesla is profitable is because of U.S. government subsidies. Erase the tax payer fed incentive and the company is still running in the red.

    I hope it is successful though. If Tesla can manage to break-up the dealership model, it will be a big win for Ford and GM which has been trying to do direct sales for decades.

  • Report this Comment On March 22, 2014, at 8:14 PM, nonqual wrote:

    Less than 18,000 of Tesla's 22,477 sales in 2013 were in North America. You can check montly NA sales on InsideEVS.

    Tesla was late in delivering cars to Europe, starting slowing in the 3rd quarter. By the end of the 4th quarter, Tesla had effectively exhausted its backlog in Europe, except for the severely late right hand drive version. Registrations reported in 2014 in Europe were less than 300 in January and less than 600 in February. You can check European monthly new registration on EVsales.blogspot and/or on Bestsellingcars.blog

    If Tesla is "supply constrained" why would they try to enter the Chinese market prematurely with a single store, no existing Chinese charging infrastructure, and without affiliating with a connected local entity?

    There is no X "alpha" yet (it's very late.) The S alpha was claimed before the end of 2010. Two years after the S alpha was claimed, Tesla was able to deliver only 2,750 vehicles despite having a backlog of over 15,000.

    Reality is demand in NA and Europe is flat if not decining. Tesla guided down on deliveries from Q4 to Q1. The X will cannibalize sales from the S and some existing S owners will need to sell their S to be able to afford the X; used Ss will compete with new S sales.

    The X proto-type was revealed in February 2012 (it too was late having been promised for over a year to be revealed in late 2011.) The earliest anyone has suggested the E will be revealed is at the 2015 Detroit Auto Show. The X is on the same platform as the S. The E requires a totally new platform. Imagining an E will be delivered in 2017 is foolish. Fool on!

  • Report this Comment On March 23, 2014, at 12:34 AM, CarFanatic wrote:

    Nonqual,

    You are mis informed. Tesla has exceeded all expectations to date. And that will only accelerate.

  • Report this Comment On March 23, 2014, at 12:58 PM, Ustauber wrote:

    ThxTsla

  • Report this Comment On March 23, 2014, at 2:22 PM, nonqual wrote:

    CarFanatic:

    That was a compelling rebuttal. Tesla now has $2.9 billion in debt and so far has lost $1.25 billion while selling less than 28,000 cars. It's likely a good portion of that debt will come due before the E ever gets to volume production. How is Tesla going to fund the repayments? Issue more stock or borrow more?

  • Report this Comment On March 23, 2014, at 5:02 PM, drax7 wrote:

    Only those that fear the EV because their business will eventually be obsolete can be against tesla. They continue to spew FUD and they fail to gain traction.

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