Tesla Surprises, Boosts Supercharging Stations

Zacks

Tesla Motors Inc. (TSLA) is full of surprises! The electric carmaker announced that it will add more supercharging stations across the U.S., which are 10 times faster than the ordinary public charging stations, so that its Model S owners can travel across the country without worrying about the batter driving range.

The company plans to increase the number of charging stations threefold from 9 to 27 by the end of next month, which could further rise to 100 by the end of next year.

Electric cars have always been criticized for limited driving range leading to their weak demand. This led to limiting sales of vehicles such as Nissan Motor’s (NSANY) Leaf, General Motors’ (GM) Volt and Toyota Motor’s (TM) plug-in Prius.

Compared to its counterparts, Tesla’s Model S has a relatively longer driving range. The vehicle can travel 208 miles per charge for about three hours in normal driving conditions while its top-end model can travel about 265 miles in a single charge.

However, with the expanded supercharging network, owners of Model S sedan can make long-distance trips without any hassle since the network can recharge the battery to 50% of its capacity in 20 to 30 minutes. With further improvements in technology, Tesla will reduce the time to fully recharge the battery nearly half to 20 minutes. The new technology is in beta version now. It will allow the Model S to be charged at 120 kW, up from 90 kW previously.

Currently, Tesla has 8 supercharger stations in California and on the East Coast. The company plans to add four stations in California this summer, so that by fall this year; it should have charging stations in most metro areas.

By 2014, Tesla plans to install charging stations within reach of 80% of people in the U.S. and Canada, and 98% by 2015. With this, the company intends to provide supercharging stations every 80 to 100 miles.

The company revealed that the average cost per station, is roughly $150,000 in capital expenditures, without solar. An additional $150,000 will be required with the solar charging; pushing each station’s cost to roughly $300,000.

Currently, all Model S vehicles (size comparable to an Audi A6 or the BMW 5 series) have supercharger capabilities with the 85 KwH battery pack. It also has an optional 60 kwH battery pack. They are priced around $70,000. However, the company expects to launch more affordable electric cars in 3 to 4 years in a $30,000 to $40,000 range, which will probably be smaller than Model S.

Recently, Tesla paid off the remaining $465 million U.S. Department of Energy (DOE) loan much earlier than expected. The electric carmaker received the loan in Jan 2010 and agreed on a 10-year repayment program. However, the situation became so much favorable that the company repaid the full outstanding amount of the loan in the second installment itself.

Last December, Tesla made its first DOE loan repayment of nearly $13 million. On May 22, the company paid off the remaining $451.8 million using the near-$1 billion proceeds from the common stock and convertible senior note offering made last week.

Tesla’s share prices started soaring following the reports of its first-ever quarterly profit on May 8 and early loan repayment. On May 29, Tesla shares hit new 52-week high of $114.90, which is above its previous level of $110.75 a day before. Their last closing price of $104.95 represented a whopping one-year return of 277.8% and solid year-to-date return of 224.9%. The company has a market cap of $12.0 billion.

In 2012, Tesla lost $396.2 million or $3.69 per share compared with $254.4 million or $2.53 per share in 2011. Due to a good start in 2013, the company had expected to repay its DOE loan much earlier and boost production of vehicles to lower production cost.

Tesla reported its first-ever quarterly profit of $15.4 million, or 12 cents per share (on an adjusted basis) in the first quarter of 2013 compared with a loss of $79.3 million or 76 cents in the corresponding quarter of 2012. This indicated a whopping positive earnings surprise of 271.4% given the Zacks Consensus Estimate of a loss of 7 cents for the quarter.

Revenues jumped manifold to $561.8 million from $30.2 million in the first quarter of 2012. Thanks to the impressive 5,000 units of Model S electric car sales during the quarter.

Tesla expects to manufacture 5,000 Model S vehicles in the second quarter of the year. For full year 2013, the company expects to deliver 21,000 Model S cars globally, up 5% from its prior guidance of 20,000 units.

Shares of Tesla retain a Zacks Rank #3, which implies a short-term (one to three months) Hold rating.

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