Motor traders should prepare themselves for a changing commercial landscape, says Trade Plan Insurance
Tesla, a US state-supported electric car manufacturer, published dazzling first-quarter financial results for 2013, suggesting the era of the plug-in car may have arrived in earnest.
With almost 5,000 delivered worldwide, the Silicon Valley company's Tesla Model S luxury electric sedan outsold the German top-three, the Audi A8, BMW 7 Series and Mercedes S Class. One of few cars designed specifically as an electric vehicle, the 2012 Model S was named Car of the Year by two major American motoring magazines while Consumer Report pronounced it the best car they had ever tested.
Electric car and electric vehicle component manufacturer Tesla Motors announced a 5m profit for the period, its first in ten years of trading. Revenue increased by an impressive $562m and its gross margin rose nine per cent to 17 per cent, outperforming both Toyota and General Motors.
The Californian company is owned by PayPal founder and transport innovator Elon Musk, whose SpaceX company produced the first commercial capsule ever to dock with the International Space Station. He recently launched the first Supercharger car charging station in the US.
The company used a $465m 'stimulus' loan from the 2009 Obama administration to rebuild a factory formerly owned by an unsuccessful General Motors/Toyota joint venture. Despite high-profile critics like Mitt Romney, who branded it a ‘loser', Tesla is now valued at nearly $20bn0bn and intends to repay the loan five years early to escape a clause allowing the government to purchase three per cent of shares at $7.54 each. The value of a Tesla share is currently about $90.
A letter to investors refers to a "strong global demand" for the Model S amounting to more than 20,000 orders per year. There are plans to launch a Model X' SUV in 2014 and a cheaper sedan is likely to follow.
With 7,000 of those orders coming from Europe, the biggest market in the world for electric vehicles, we should expect a significant shift in the UK car market. The government is already investing in charging points around the country and offering green incentives. Rising petrol prices could drive even the least environmentally conscious motorist to switch to the right car.
Expected in the UK this summer, the Model S will cost £83,000 and purchasers will be eligible for a £5,000 government Plug-in Grant. A February 'CAR' review described it as "the single most significant American car for decades". Declaring it a potential game-changer because it fully demonstrates the computerised EV's inherent potential, CAR awarded the Model S five stars for both 'performance' and 'feelgood factor'.
In this first quarter, UK registrations of alternatively-fuelled cars are already up 2.9 per cent. Research conducted last year by Motor Trader suggests EVs could account for 20 per cent of the UK car market by 2020.
In November a blogger for Trade Plan Insurance services was already predicting forecourts full of electric vehicles after observing the success of 'The RAC Brighton to London Future Car Rally'. Motor traders may need to prepare themselves for a changing commercial landscape.