For all of its apparent success in disrupting the car industry, Tesla has only turned a profit for one three-month period since being founded in 2003. Owner Elon Musk previously told investors that Tesla would be in the black by the end of this year, but that might be tough because the company’s reported losses for the first quarter of 2015 totaled $154 million.

That’s a ton of cash by any measure, especially considering the company lost just $49.8 million in the same quarter last year, but there is a method to Tesla’s madness. The good news is revenue rose 51 percent to $940 million, and the second quarter is looking good. Production is projected to expand by 12 percent to 12,500 vehicles, and demand for the Model S remains strong.

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Why it matters

In short, Tesla is investing in its future. The Model X crossover SUV is slated to hit showrooms in the third quarter, and the pre-orders for it are approaching 25,000. Combined with current Model S sales, the company is projecting a total of 55,000 cars sold in 2015. On top of that, Tesla also announced that pre-orders for its Powerwall home and business battery have exceeded 38,000. The Powerwall and other Tesla batteries will eventually be manufactured at the company’s Gigafactory 1 near Reno Nevada, which represents a $5 billion investment and is scheduled to be online by 2017.

While I wouldn’t suggest running out and buying as much Tesla stock as you can carry, I also wouldn’t push the eject button if you already own shares. Tesla is investing in its long-term future because it can afford to do so. It probably won’t make money by the end of this quarter or even by the end of the year, but, baring any breakthroughs on fusion technology, Tesla will make money in the future.

2015 Tesla Model S P85D

2015 Tesla Model S P85D High Resolution Exterior
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Read our full review here.

Source: LA Times

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