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Summary:

Tesla is now officially a success according to blind-sided investors and media. Tesla didn’t emerge last week with a win, it’s taken a decade to deliver and true game-changing innovation takes a very long time.

Tesla Model S, image courtesy of Tesla.

Last week electric car maker Tesla hit the goal of delivering its first profitable quarter in the history of the decade-old company, and since then Tesla’s stock has soared and traded at over $90 per share. At the same time, review giant Consumer Reports said last week that Tesla’s Model S outscored “every other car in our test ratings.” That’s every other car out there, not just other electric cars.

What followed those milestones has been an interesting mix of attention on Tesla from the media and bloggers — including surprise, extreme 180-degree about-face, and a general lovefest — as well as attention from Wall Street, which bifurcated into newly won-over Tesla-believers and disturbed Tesla shorters. What most of these people fail to realize is that the road to true innovation in the auto industry takes a very long time.

Tesla Model SOn the blogging front, for example, in a Business Insider post on Wednesday called What Everyone Got Wrong About Tesla, a writer chronicles the criticism of Tesla over the years. The writer didn’t include my least favorite article from all of 2013 written on Tesla, by Henry Blodget, editor-in-chief of Business Insider, called “The Tesla Nightmare Shows Why Today’s All-Electric Cars Are (Basically) Dead On Arrival.”

It’s not that electric cars won’t struggle (see my long investigative piece on Fisker), but that many people just don’t get how the ecosystem, technology, and marketplace work and are so quick to make declarations about electric cars for the sole purpose of getting attention and — if you’re a blogger — page views. Tesla has actually emerged as a success story, not in the last week, but gradually over a decade by overcoming hurdles every day.

Another company took a very long time to twist and turn, and finally come out on top, too: Apple. And some of Tesla’s most gushy recent love-fest posts are about its comparison to the design-centric gadget maker: Tesla is the new Apple, Would Apple really buy Tesla? (no), and Elon Musk is the new Steve Jobs. Like the legions of Apple and Jobs fanboys, Tesla and Musk are now on the way to developing their own fanboys that will track their every move and product.

Tesla Model SWhen it comes to investors, short interest (the amount of shares that investors have sold short, expecting the stock to drop in price) in Tesla since the company went public in 2010 has been nothing short of remarkable. According to Bloomberg, “short interest in Tesla was 40 percent of available shares as recently as April 19, more than 11 times the average of companies in the Russell 1000.”

But following Tesla’s milestone’s last week, short interest dropped by 17 percent in the five days through May 13, noted Bloomberg — Tesla shorters were forced to “buy $276 million worth of the automaker’s shares, pushing the company toward the biggest rally in the Russell 1000 Index (RIY) this year.”

I don’t remember a company in recent years, other than maybe Apple, that has had such massive skepticism from media and investors, followed by such intense love. This week there’s Apple-style product rumors buzzing about Tesla showing off a self-driving Model S, and launching a battery-swapping service (that would actually be cool). Usually it’s the love-hate relationship unfolds the other way around. The internet is a weird place.

Tesla actually made it past its most recent dangerous startup phase over half a year ago. Back in November 2012 Tesla CEO Elon Musk said that Tesla had “made it through the Valley of Death,” and reached its goals for scaling up Model S production.

Musk might be a media and stock puppeteer (see the 5 lessons from the NYT, Tesla dust up) but as a leader of a public company it’s not in his best interest to publicly lie. Tesla was clearly on its way to success back then — after nine years of overcoming hurdles. The earnings and stock are just a delayed sign of that performance. And before that Musk made it through the darker periods of the company in 2008, by personally floating the company and even borrowing money from friends.

The reality is that Tesla has just started on its full court press on announcements, media coverage, and stock growth, and is hoping for a marketcap that rivals the big auto companies. These are 10 milestones that Tesla hopes will enable it to hit a $43 billion marketcap.

Tesla will also no doubt hit some hurdles as it tries to transition into a larger auto maker — if anyone remembers it delayed its Model X launch by a year to the end of 2014. But it’s actually pretty hard to be an independent new automaker, and true game-changing innovation is even harder and takes a very long time.

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  1. Nick Prudent Thursday, May 16, 2013

    Spot on as usual Katie. Some stock brokers took financial advice from Fox News and lost out. Now, I’m hearing a lot of grumbling from Prius owners who feel that Tesla has “marginalized” their favorite cars and bitter that they can’t yet afford a Model S. Funny how they don’t feel the same toward the Leaf.

    Tesla — like Apple — does bring out extreme emotions…

  2. One quarter does not mean they are out of the woods and I would interested in hearing what their current backlog is?

    1. Brian W. Crumley bob Thursday, May 16, 2013

      Hard to say what their backlog is now. They use to release reservation numbers in there quarterly reports but that well has dried up. Its a shame really, I liked the open nature of Tesla’s previous reporting.

      1. Backlog is somewhat relative. We ordered our Model S in late March and took delivery in the beginning of May. That was faster than it takes to custom order an Audi (we looked at those before the Tesla) and Tesla was faster to build than the Jeep I bought two years ago. Right now, constraints on orders aren’t due to systemic shortages but certain options may push you back a bit in the queue.

  3. Emil Kári Ólafsson Friday, May 17, 2013

    One thing to note here is that currently Tesla is only delivering to North America. The rest of the world is waiting and the back log there is at least thousands of cars. And the other thing is that the trend so far they say is that for every car delivered, is two more sold in that area. So even though you can get a fully spect car with out much wait does not mean the waiting list for the S is no more.

  4. It’s great that Tesla is selling and a pity that the better car, Fisker Karma, got the plug pulled by the US government. Both cars fill a niche, but where the Karma looks and drives better and actually has a battery generator, Tesla’s are golf carts with range anxiety. The future belongs to cars that can be green locally yet drive great distances when necessary, not short-range golf carts for zipping around town only. Fisker should have been supported fully by the US government, rather than have the funding pulled because of delays. Tesla had similar delays, every car takes longer to start production. Henrik Fisker pulled off what nobody else has done, create a new car so beautiful everybody wants one – so had the Atlantic been produced, it would have been a success. Sandy killing 400 Karmas with no insurance, the battery manufacturer going bankrupt, bad press from a fire incident, how can ANY start up company survive that? Only through cash flow, so if the US Government had not shut down the loan, we could have saved an AMERICAN company as innovative as Apple. Stop the bad press and give them a chance – probably too late now, but boy, did we mess up future entrepreneurs wanting to build innovative cars in America !!!

    1. Fisker was a beautiful dud. Comparing the Model S to a golf cart is like comparing the Concorde to a Cessna.

  5. Bo H;….., Fisker is not the better car by many standards. Fuel type, price, complexity, excess power and pollution levels, and driver comfort . Karma wasn’t selling.

  6. Try driving one! It is by far a better car, but Tesla will catch up in many ways – just not in the one area that matters, appeal. Once European manufacturers roll out exciting hybrids, the golf carts will be forgotten. I hoped the best for Tesla and Fisker, but after driving them Fisker is the best car. Teething problems, yes, but all cars including jaguar first year models have the same. The press has been merciless on Fisker, basically helping shut it down by scaring people off. The factory in Finland makes Porsches, Lotus’es etc – and after getting the initial issues out of the way, the Karma is an impressive first car for any company.

    Fuel type? same as all. Price – cheap for such a car, Atlantic would have been a hit. Complexity – try driving one, so much simpler than normal gas-guzzling cars. Pollution levels – with 90 % of driving in electric city mode, pollution would be MUCH less than the aforementioned cars. Driver komfort – try driving one, most compfortable car I have EVER driven.

    No, it’s a pity that all this negative press and unfortunate events killed the car – it would have been a great American success story.

    1. As a Model S owner I can attest that at least two freinds have ordered the car since looking at or riding in mine. Once you experience the Model S driving experience any gas car is a disappointment including hybrids. Looking forward to delivery of Model X in 2015.

  7. As to Fisker Karmaa, may it rest in peace, it is a beautiful car to look at. I know a guy who sold his FK to buy Model S. Very happy wirh MS. But said the FK was like dating most beautiful cheerleader in high school and then trying and failing to have intelligent conversation wirth her. This is very good article by the way.

  8. arlindsadiku Saturday, May 18, 2013

    I Love this Car :-)

  9. Fisker Karma got bad review from Consumer Report while the Model S was declared one of the best car they ever tested.

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