Tesla has had one hell of a run lately. It reported its first quarterly profit. It's brainstorming self-guided cars with Google. The stock is sizzling.
And Consumer Reports, which is not prone to gushing, said Tesla's Model S "performed better, or just as well overall," as any vehicle the magazine has ever tested.
Let's just take a deep breath. Amid all the buzz, it's important to realize what Tesla has and hasn't accomplished.
Tesla is developing along the lines of Porsche, selling high-ticket prestigious vehicles in modest volumes. If it sustains profitability, CEO Elon Musk will have created a viable automaker. Add in the fact that these are electric vehicles and you have a historic accomplishment.
But the goal of making EVs into mass-market products that many people can afford remains elusive. The industry is roaring toward 83 million global sales this year, according to IHS Automotive. For EVs to have any appreciable effect on emissions and petroleum dependency, volume sales are needed.
Tesla's plan for a vehicle in the $30,000 to $35,000 range thus becomes critical, particularly because the Model S is more expensive than envisioned. At the 2009 Frankfurt auto show, Musk told Automotive News that the Model S would sell for $49,900.
Tesla created impressive range in the Model S, but only by loading in a monster battery pack that pushed the price into luxury territory. The top-level model, with its 85-kWh battery and 265-mile range, starts at $79,900. A performance version begins at $94,900. Tesla also offers a 60-kWh Model S with a 208-mile range and a $69,900 base price. (Prices exclude the $7,500 federal tax credit.)
Meanwhile, in March, Tesla canceled the 40-kWh model, priced at about $60,000, saying that few consumers wanted it.
Obviously, a startup's overwhelming priority is to get into the black. Tesla found a profitable niche with luxury EVs -- which, again, is a pretty amazing achievement.
But the next challenge will be tougher.