Tesla Motors Turns a Profit: The Economics Of Electric Cars

Mitt Romney is wrong, again. After calling the electric car company a "loser," Tesla announced this week that for the first time ever it will be making a profit. Along with the upbeat news, Tesla stated it would pay back its loans to the Department of Energy five years early. Not too bad for the 2012 Motor-trend car of the year.

While the technological shift to electric cars is precisely what our environment desperately needs, it comes as a newsflash to the rest of American practices. Relying on coal to power our  "environmental" cars is self-defeating logic. Rather, the rise of the electric car signifies the need for more solar, wind, and nuclear sources to power the grid. 

Electric cars represent a paradigmatic shift in the way people will get around in the future. Unlike their toxic-emissions producing counterpart, electric cars are heralded as the technology we need to move forward into a more sustainable world. But this overlooks an important concept; the electricity used to "fuel" these cars comes from harmful coal burning.

A recent Gallup poll suggests that renewable, environmentally-friendly energy sources may not be all that distant. Instead, by the looks of it the American population wants renewables now. Partisan splits aside, it appears most Americans overwhelmingly support solar and wind energy over archaic, environment-destroying oil.

 

Will a shift in attitude translate to a shift in consumer preferences? That is, when are people going to start demanding environmentally-friendly practices? This is a trick question; the low-carbon economy has been evolving for years. The problem left for companies like Tesla Motors to face is infrastructure.

Although the White House announced construction of seven major renewable energy infrastructure projects as part of its "We Can't Wait" initiative, a great deal of progress remains. Without this type of government investment, green industries all over looking to move away from ancient petrol are effectively crippled. The government should be a steward for its people's needs, not against. Electricity is the future whether we like it or not; why not embrace it by preparing for it?

The proof is in the pudding. After a dismal end of the year for Tesla Motors, the company forecast sales of 4,500 units of the Model S. Nevertheless, Tesla reported sales of over 4,750 units this past weekend. Optimistic sales numbers have translated to profits.

Tesla Motors CEO Elon Musk ignited enthusiasm in a statement on Sunday, "There have been many car start-ups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution." Musk is renowned for his radically innovative practices: he is also the CEO of the first private space company SpaceX.

The fact of the matter is that the future is here! In celebration, we should embrace cleaner energy sources as most Americans would agree. After all, how nice does an electric car sound when you could have 10,000 barrels of crude oil running down your street?

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Grant Ferowich

Grant studies at Wake Forest, where he majors in philosophy and economics.

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