Why Tesla Is Serious About Its European Expansion
Updated from 10:27 a.m. to include information from Morgan Stanley.
NEW YORK (TheStreet) -- Although the majority of Tesla Motors
At the Geneva Auto Show, Tesla announced it would open more than 30 service centers and stores across Europe, while rapidly expanding the Supercharger network unveiled last spring.
Shares of Tesla were higher in early Tuesday trading, gaining 2.1% to $255.75.
The Model S has been incredibly well-received, both domestically and abroad. Tesla recently won the honor of being Consumer Reports top car in 2014, after having been recommended by the publication in 2013 as well. In 2013, the Model S was named Sweden and Norway's Car of the Year, as well as winning the Most Stylish Car award in Switzerland, and the Car of the Year Prize of Honor in Denmark. Judging by those award wins, it's clear that European consumers are serious about the Model S, and now Tesla is providing the infrastructure necessary for them to drive the car.
The Supercharger network is key to Tesla's expansion not only domestically, but also abroad, as it alleviates "range anxiety," the feeling drivers get when the battery is low and there is no place to recharge. Tesla CEO Elon Musk noted that the rapid expansion of the Supercharger network is important to European travelers. "By the end of this year, we expect you will be able to travel almost anywhere in Europe using only Superchargers," Musk said in the press release.
Though Tesla delivered more than 22,000 cars to customers worldwide, the company was supply constrained in the third quarter, with the automaker having to "starve" demand in North America to feed Europe. It looks like that issue was partially solved in the fourth quarter, as Tesla delivered 6,892 Model S units, and had a 25.2% non-GAAP gross margin for the quarter.
However, the company still remains slightly supply-constrained. For the first quarter, Tesla said it expects to produce about 7,400 Model S units, up from 6,587 in the fourth quarter of 2013, yet due to the number of cars in transit to Europe and Asia, Tesla will deliver about 6,400 vehicles in the first quarter.
Despite that, Musk has said in the past that Europe is expected to pick up in the coming quarters, due to the sheer number of people waiting for Model S vehicles there. However, the company also has other issues in Europe, largely because of charging issues.