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Tesla Motors expects first profit; Fisker Automotive eyes bankruptcy

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James Fassinger/Reuters/File

(Read caption) A customer takes a photo of an unfinished Tesla Model S during a tour at the Tesla factory in Fremont, Calif. Tesla Motors expected to sell 4,500 Model S cars in the first quarter of 2013 but the company announced it sold 4,750 units.

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Tesla Motors announced late Sunday it expects to report a profit for the first time in the electric carmaker's 10-year history. Meanwhile, Fisker Automotive, its main competitor, may be careening toward bankruptcy. 

The contrasting narratives are not unusual in an electric car industry marked by highs and lows. Fisker shut down production of its plug-in hybrid Karma last November after its battery manufacturer declared bankruptcy. It has struggled, and failed, to restart production of the luxury sedan ever since. 

Tesla is no stranger to hiccups either. A calamitous February test drive by a New York Times reporter created a public relations headache. The ensuing spat between Tesla and the Times raised questions over the ability of the Model S battery to perform in cold weather – a sensitive topic for an industry that has worked to assuage public concerns about the battery range of electric cars.

But Tesla rolled with the punches and has suffered fewer blows than its rival. It expected to sell 4,500 Model S cars in the first quarter of 2013, but the company announced late Sunday it sold 4,750 units. Shares of Tesla stock shot up 16 percent in trading Monday. The success is a departure from the last three months of 2012 when the company reported a $75 million loss. 

"There have been many car start-ups over the past several decades, but profitability is what makes a company real," said Elon Musk, Tesla Motors co-founder and chief executive officer, in a statement Sunday. "Tesla is here to stay and keep fighting for the electric car revolution.”

The outlook for Fisker Automotive is less certain.

In March, Henrik Fisker, the company's co-founder and executive chairman, resigned over disagreements with management. Two weeks later, more than 200 employees were furloughed in an effort to conserve cash. Last week, The Wall Street Journal reported the company had retained restructuring lawyers at Kirkland & Ellis LLP to prepare for a possible bankruptcy filing.

Fisker's downward trend has likely contributed to the boost in sales of Tesla's Model S.

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"For people who want to be out in front and driving high-end electric vehicles, there isn’t really any other choice right now," said Tom Libby, senior forecasting analyst at Polk, an automotive industry analysis firm based in Southfield, Mich.

Electric vehicles still only account for approximately 0.1 percent of the US market, Mr. Libby cautioned, and high-end sedans like Tesla and Fisker represent an even smaller subset of that EV niche.

"While Tesla is announcing a profit – and that’s terrific – it's not a reflection of the broader electric vehicle market in the US," Libby said. "That broader market is still extremely small."

For EV enthusiasts, the good outweighs the bad. 

"Our membership includes companies across the entire electric-drive supply chain and no two companies are exactly alike," wrote Genevieve Cullen, vice president of the Electric Drive Transportation Association, a Washington-based advocacy group, in an e-mail. "They have varying structures, business models and market challenges. So there isn’t just one pathway to success; there are many."   

The supply chain for electric drive vehicles is increasingly robust, Ms. Cullen added, and electrified transport provides an exciting alternative to oil.

"[T]hat's good for the nation, as well as shareholders," she wrote. 

 

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