Tesla Reports Earnings From A Wintery 4th Quarter

Tesla Reports Earnings From A Wintery 4th Quarter

After the bell on Wednesday, Tesla released its 4th quarter results.  Overall the company reported a $46 million dollar profit, or 33 cents per share (ex-items).

The street had been looking for about 21 cents per share (adjusted) and a loss of 2 cents on a generally accepted accounting principles (GAAP) basis for the last quarter of the year.  After adjustments, Tesla lost 16 cents per share.  Of note: $4.6 million of profit was realized via a favorable currency swap.

In Mid-January At The 2014 NAIAS Tesla Noted Deliveries Of The Model S Were Tracking About 20% Higher Than Earlier Estimates

In Mid-January At The 2014 NAIAS Tesla Noted Deliveries Of The Model S Were Tracking About 20% Higher Than Earlier Estimates

As for overall revenue and sales, Tesla banked $761 million ($615 GAAP)against expectations of about $700 million.

For specific Model S sales the company had estimated that 6,900 Model S sedans would be sold in the quarter - in actual fact, they sold 6,892.

But more important than the revenues themselves is how much margin Tesla made on that money, and where they are going in the future.

The company had told analysts they were expecting to have an automotive margin of 25% by year's end (excluding ZEV credits) - and almost hit that last quarter.

For Q4, Tesla indeed reached their goal with a margin of 25.2%.  Tesla sees this number going as high as 28% in 2014 "through a series of small design improvements, better supplier prices and economies of scale."

For 2014, Tesla expects to deliver 35,000 Model S sedans, which would be up 55.7% over the 22,477 sold in 2013.

"Production is expected to increase from 600 cars/week presently to about 1,000 cars/week by end of the year as we expand our factory capacity and address supplier bottlenecks. Battery cell supply will continue to constrain our production in the first half of the year, but will improve significantly in the second half of 2014."

Supplu Constraints Of Lithium Batteries From Panasonic Will Continue To Be Problematic For Tesla In The First Half Of 2014 (Panasonic/Tesla Booth At Tokyo Motor Show Shown)

Supplu Constraints Of Lithium Batteries From Panasonic Will Continue To Be Problematic For Tesla In The First Half Of 2014 (Panasonic/Tesla Booth At Tokyo Motor Show Shown)

It should be noted that inside this 35,000 number for 2014, Tesla estimates to deliver only 6,400 vehicles in Q1 (while building about 7,400) and that the bulk of sales will come from outside of North America to end out the year, pointing to transit issues for the sales decrease this quarter.

A statement by the company also shows how reliant they will be for sales growth outside North America going forward:

"The potential in Europe and Asia is even more significant. Towards the end of the year, we expect sales in those regions combined to be almost twice that of North America."

Clearly this is Tesla's first admission that ongoing US demand is much lower than is widely thought - but is offset by international demand that is conversely much higher than anticipated.

InsideEVs ourselves had pegged monthly demand in the US to fluctuate just between 700 and 1,100 for most months heading into 2014.  (so we are giving ourselves some premature back-pats on that now)

Other Revenues

"Both Toyota and Daimler powertrain programs remain on plan and contributed $13 million of revenue in the quarter. Q4 sales also included $15 million of regulatory credits revenue (GHG), but no zero emission vehicle (ZEV) credit sales."

Tesla Model X Confirmed For

Tesla Model X Confirmed For "Volume Deliveries" In Spring Of 2015

Looking Ahead

Tesla noted that R&D expenses were going to increase in 2014 as they work to expand their worldwide footprint as well as introduce the Model X to the world "in volume" in the Spring of 2015, along with early design work on their next, more inexpense offering expected in 2017.

"Operating expenses and capital expenditures will increase significantly in 2014, as we plan to invest in the long term growth of Tesla. We plan to expand production capacity for Model S and Model X, invest in our store, service and Supercharger infrastructure, complete the development of Model X and start early design work on our third generation car.

In Q1, operating expenses are expected to grow roughly 15%. R&D expenses will increase as design and engineering work accelerates on Model X. We expect to have production design Model X prototypes on the road by end of year and begin volume deliveries to customers in the spring of 2015. SG&A spending will grow as we expand globally our retail presence and add more Superchargers."

Curiously, Tesla was mum on plans for a new "Giga factory" in this report , but said that information was coming soon:

"Very shortly, we will be ready to share more information about the Tesla Gigafactory. This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation. Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years. This will also allow us to address the solar power industry’s need for a massive volume of stationary battery packs."

Shares were up as much as 15% in afterhours trading, and the stock closed Thursday at @$209.89, up $16.25 (8.39%).  A real time quote can be found here.  Also check out Tesla's Shareholder letter in PDF form here.

Tesla is also holding an after-hours press conference (as well as a Q &A) Wednesday evening.  UPDATE:   Details of the call can be found here.