To achieve profitability, Tesla asked customers to pay early for cars

To achieve profitability, Tesla asked customers to pay early for cars

The current media narrative surrounding Tesla, the electric car company: Tesla is profitable in the first quarter of 2013! It sold 4,750 cars, which beat its projections

The above good news is accurate; Tesla isn’t lying about its finances, sales, or net income. However, how the company managed to hit those figures, and reach profitability might have more to do with its customers being enthusiastic supporters of the company, willing to shell out cash early, than underlying, broad market demand.

According to Bloomberg, which secured an email sent by the company – Tesla has confirmed its veracity – to a customer, the car maker encouraged customers to pay in what appears to be an early fashion, allowing it to slip over the mark of profitability.

Here’s part of the email, as transcribed by Business Insider:

Tesla is right on the cusp of profitability this quarter for the first time in 10 years since the company started. This is a huge company milestone that will not only be great for the company, but also for our customers.

In order for Tesla to be able to count your Model S for the quarter, we simply need to receive payment.

This makes Tesla’s better-than-expected sales and first quarter profit far less impressive.

This is not to take away from Tesla itself; the company is innovative, and on an aggressive path of growth. Still, it leaves a bad taste in the mouth when a company strives to bend media narratives to its favor in a way that will leave many in the public confused; far fewer people will read and understand how Tesla managed what will likely be a single quarter of profitability – I doubt it will repeat the feat in the second quarter, but am happy to be incorrect – than who read that it was now ‘profitable.’

Top Image Credit: randychiu

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