3 Reasons to Love Tesla Motors Inc (TSLA) in 2013

Tesla Motors Inc (NASDAQ:TSLA) got off to a fast start this year, with its all-electric Model S sedan snagging Motor Trend magazine’s 2013 “Car of the Year” award. The zero to 60 mph gas-free ride even beat out non-electric vehicles from more established automakers including General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) for the coveted spot.

This was no small feat for a company that just a year ago was one of the most shorted stocks on Wall Street. Tesla has come a long way in that time. In fact, the stock is up more than 10% year-to-date as we head into February. Could this finally be the ear that the electric vehicle start-up turns a profit? Tesla CEO Elon Musk thinks so.

While significant challenges remain, demand for electric and hybrid cars is starting to gain momentum. Barron’s expects sales of battery electric and hybrid electric vehicles in the U.S. to grow 130% year over year to more than 127,000 in 2013. As it stands, Tesla’s Model S ranks among the top-five, best-selling, alternative fuel vehicles. The other four spots go to GM’s Chevy Volt, Toyota Motor Corporation (ADR) (NYSE:TM)‘s Prius, Nissan‘s LEAF, and Ford’s C-Max.

With these tailwinds behind it, let’s take a closer look at three areas that investors should be most excited about for Tesla in the New Year.

Increased production
It seems that Tesla is successfully increasing production on its Model S line. According to reports the company has hit its benchmark of about 400 cars per week, or 20,000 Model S sedans a year. This should help the company achieve another key goal: reaching profitability this year.

The Model S production ramp-up is also important if the Silicon Valley-based company is to stay on schedule with the development of its Model X all-electric SUV. That’s because Tesla plans to use its Model S platform to launch the Model X crossover, which is slated for delivery in 2014.

When asked about boosting production in the year ahead Musk explains: “We need to get in excess of 20,000 units a year and in excess of 25% gross margins, which would be close to the highest in the car business.” This is definitely an area that investors should keep an eye on in the quarters to come.

Retail expansion
The way Tesla sells cars is fundamentally different than any other car manufacturer on earth. The company is changing the rules of retail and opening mall stores around the country. Taking a page out of Apple Inc. (NASDAQ:AAPL)‘s playbook, Tesla hired George Blankenship, Apple’s ex-real estate chief, to head up its disruptive retail strategy.

Now as Tesla’s vice president of worldwide sales, Blankenship hopes to replicate the success he once achieved at Apple. During his 10 years with the iPhone maker, Blankenship helped Apple open its first retail stores. Critics everywhere said the concept would fail. In fact, Bloomberg published a story in 2001 with the headline, “Sorry, Steve: Here’s Why Apple Stores Won’t Work.” In retrospect, we now know that they did work. Better still, Apple’s retail stores helped make it the most valuable company in the world, if only briefly.