To say it's been a great couple of weeks for Tesla Motors
(NASDAQ:TSLA) would be putting it lightly.
On Wednesday, May 8, the rapidly-growing manufacturer of electric cars became a Wall Street darling after its announced its first-ever quarterly profit, driven by significantly better-than-expected sales.
But even more importantly, the highly-influential Consumer Reports
gave the Tesla Model S luxury sedan a stunning 99/100 score, making it the highest rated car of all time.
That wasn't the only source of praise for the Model S.
named it the 2012 car of the year (as did many other outlets), and extremely positive reviews have streamed in from everyone from Edmund's to Yahoo Autos to the Wall Street Journal
So I'll get right to the point. I think Tesla is right where Toyota
(NYSE:TM) was with the Prius hybrid at the turn of the millennium.
From 2003 to 2004, I served as a spreadsheet jockey for a Toyota research department. Internally (and this is no secret), the company was massively bullish on the potential of hybrid cars.
But externally, for mass-market consumers, the Prius was largely viewed as a novelty item for smug, tree-hugging, ostentatious hippies.
Back then, I spoke to an awful lot of consumers who 1) didn't know what a hybrid card was or 2) insisted they would never become popular.
Then, gas prices started going up.
And as it turned out, the Prius, while a bit odd-looking, was a pretty good car, and because people got tired of sticker shock at the gas station, they started buying Toyota's hybrid in droves. In 2003 in the US, Toyota sold less than 25,000 Prii (plural for Prius). Sales more than doubled the next year and hit 181,000 in 2007 before leveling off and falling a bit.
In a very strong 2012, the Prius was one of the top-10 selling cars in the US, and the best-selling car in California.
Now is the Tesla Model S destined to hit the top 10?
Probably not. Tesla's a long way away from getting even 1% of the auto market. Plus, the Model S starts at about $64,000, and it runs on an unfamiliar technology (an electric engine) with a limited range of 200-265 miles before recharging is required. Those are big obstacles for a lot of people.
Nevertheless, the Model S is going to break down new doors for high-performance eco-friendly cars, the same way the Prius did so for the very idea of alternative engines in mainstream cars.
Now you may know that just as the Prius was not the only hybrid car in existence last decade, the Model S is not the only plug-in electric car.
But there's a big difference in sexiness between something like the Ford
(NYSE:F) Focus Electric, which according to Car and Driver
, "drives as well as a regular Focus"...
...and the Model S, which is a luxury car that goes from 0-60 mph in as fast as 4.2 seconds (with the upgraded Performance Model).
The Prius worked because it was practical. It was a quality car that had the right feature at the right time.
The Model S is working because it's just plain exciting. It has serious nerd appeal, courtesy of Tesla's engineering achievements combined with something far more primal that's contained in no modern gadget: good old-fashioned power.
And you can be sure that the rest of the car industry is starting to freak about Tesla's surging sales, small as they are today.
Most of the industry was caught completely off-guard by the success of the Prius last decade, and you can bet that they want in on the next revolution in automotive energy efficiency -- the combination of great gas, er, kilowatt mileage and pure muscle, in a luxury package.
Heck, look at what's happening in North Carolina. (See: Tesla Is Becoming Too Popular for North Carolina Lawmakers
Courtesy of my colleague Sterling Wong
The North Carolina Automobile Dealers Association is backing a bill that has been unanimously approved by the state Senate’s Commerce Committee that would make it illegal for carmakers to skip dealerships and sell vehicles directly to customers.
Given that Tesla is the sole US auto company that has a direct sales business model, it’s obvious that this legislative proposal is targeted at the Silicon Valley-based company.
If that doesn't tell you that the Model S is shaking things up, then I don't know what else to tell you.
There are a lot of obstacles to electric-car adoption in terms of infrastructure build-out and consumer comfort with a new technology, but mark my words, the Model S is the tip of the iceberg. It's going to change the industry because it's raising the bar so dramatically. Ultimately, consumers are going to win because we're going to get far better cars.
And hey, isn't it cool that it's an American company turning this business upside down for once?
The Japanese and Germans did a great job of shaking things up over the past few decades.
Now it's our turn.
And if America's in need of another aggressive CEO with a big fat middle finger directed at the corporate establishment, Elon Musk's the closest thing we've got to another Jeff Bezos.
Just look at what he did yesterday.
CEOs typically sell and sell and sell company stock until the end of time. Tesla announced a debt and equity offering at the close with the stock still near all-time highs, and Elon Musk is actually buying more Tesla stock.
That, my friends, is confidence in one's prospects.
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