Tesla Motors Q1 2015 Report

Tesla Motors Q1 2015 Report

After the market closed on Wednesday, Tesla Motors reported first quarter earnings.  So lets get right down to the numbers.

With the street expecting revenue of about $1.04 billion, Tesla came in at $1.1 billion ($940 million GAAP) - up 55% from Q1 2014.  Earnings estimates were for an adjusted loss of 50 cents per share, when in fact earnings losses were 36 cents per share/$45 million..   (GAAP $154.2 million loss, or $1.22 a share)

Margins in the automotive business increased to 28.2% (27.7% GAAP), despite "the significant negative impact of a strong dollar."

Automotive revenue continues to include significant regulatory credit revenue despite the company's suggestion it will trickle off last year.  In Q1 Tesla netted $66 million of reg revenue, $51 million of which were from the continued sale of ZEV credits.

Tesla Model S Gets Assembled In Fremont, CA

Tesla Model S Gets Assembled In Fremont, CA

Tesla Model S Deliveries

Unlike previous quarters, this number was not much of a surprise, as Tesla took the uncommon step in April of pre-announcing their estimate (10,030) for Model S deliveries during the 3 month period, as soon as the quarter ended.

Still, they noted at the time that, "There may be small changes to this delivery count (usually well under 1%)..."  It turned out that the exact number of Model S completed sales in Q1 was 10,045 - so almost bang on the money.

Of those 10,045 cars - 592 were leased, worth $63 million.

Tesla Forecasts Less Sales Of The Model S In Q2, But Re-Confirms Full Year Guidance

Tesla Forecasts Less Sales Of The Model S In Q2, But Re-Confirms Full Year Guidance

Outlook for Sales In 2015

Earlier, at the end of 2014, Tesla CEO Elon Musk guided total 2015 sales to 55,000 (Model S and Model X) - a number that has seen some waffling during this first quarter.

Of that 55,000 unit figure, the company had said it expected to sell 40% in the first half and 9,500 in Q1.  Given that 10,045 cars were actually sold in Q1, that should leave a further 12,000 to be moved in Q2.

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So, did the outlook estimates hold up to previous reports?  Not really. 

The company held onto the 55,000 full year delivery estimate, but ratcheted down Q2 total deliveries by as much as 17%

"In Q2, we expect to produce about 12,500 vehicles, representing a 12% sequential increase. We plan to deliver 10,000 to 11,000 vehicles in Q2, and we are still on track to deliver approximately 55,000 Model S and X cars in 2015."

This would leave 33,000-35,000 cars to be sold in the second half.  Realistically to us, considering the Model X production will also have to come online during this period as well, it seems highly improbable this goal will be met.

The company says it will produce a further 12,500 Model S units in Q2, a 12% sequential increase.  More importantly, in Q1 the company overachieved production estimates:

"In Q1, we manufactured 11,160 vehicles, 10% better than guidance, as we averaged more than 1,000 cars per production week."

Tesla notes margins and the average transaction pricing on the Model S will take a hit in Q2.  The company says that "the dollar has strengthened by about 4% against the euro from the time we last adjusted Model S pricing."  In most countries in Europe, Tesla has already increased EV pricing by up to 5%

Tesla Model X Out Testing In California

Tesla Model X Out Testing In California

Tesla Model X

Despite only weeks away from the most recent promise date for the Model X, Tesla disclosed it really isn't all that close to delivery SUVs yet, by pushing the much-delayed electric X's release to the back end of estimates.

"In 2015, we have already expanded our product portfolio with exciting new products and features while continuing to execute on our long-term plans. We ramped the manufacturing and availability of All-Wheel Drive Model S 85D, introduced 70D, and are building release candidate prototypes of Model X."

So if you have an early reservation deposit on an X, it is starting to looking more like a Christmas present for yourself, over a summer splurge.

More specifically Tesla states this when it comes to Model X deliveries:

"We are now building and testing release candidate Model X prototypes with increasing design maturity, and are pleased with the progress of this program. These developments, along with our maturing production capabilities, boost our confidence in the launch and production ramp of Model X, which is on track for start of deliveries in late Q3."

Previous quarter verbage for the SUV (that was originally scheduled for "late 2013") was that it would simply arrive in Q3.  Today, "late Q3" sounds more like a target of September at best - making the vehicle a clean 2 years late.

From the earnings call after the report:  Elon Musk says that depending on how Model X ramp goes, the volume essentially doubles in Q4.  Expect to see significant ramp up in fourth quarter for the X, as much as 2x other quarters. Demand is no issue - "huge" advance orders for the Model X.

Musk: Development of the Model X took longer than expected.  The CEO also notes that he drove latest prototype today, and is "by far the best SUV."   Model X configurator will be online probably in July.

Tesla Energy Powerwall To Get Battery Packs From Gigafactory Later In 2016

Tesla Energy Powerwall To Get Battery Packs From Gigafactory Later In 2016

Gigafactory Update/Tesla Energy Powerwall Pack Production

"In addition, steady construction progress continues at the Gigafactory, and together with Panasonic, we now expect to start complete battery manufacturing, from cells to modules to battery packs, in 2016."

Tesla also says both its vehicle and new Tesla Energy program will "benefit" from the project with initial quantities of battery packs this year. (details on new battery storage solution, including 7 kWh packs from $3,000 can be found here)

From conference call:  Musk - "We could easily have the entire Gigafactory do just storage."  However CEO notes that if he had to make a choice he would pick cars for batteries over the stationary storage.

Tesla Energy Powerwall

Tesla Energy Powerwall

The company also gave some more specifics on the Tesla Energy program:

"In Q1, we made substantial progress on our 2n generation Tesla Energy grid battery products.  This lead to our April 30th launch of the $250/kWh industrial Powerpack and the $350/kWh residential Powerwall, and these attractive prices include controls, cooling and DC/DC power electronics.

The customer response to these products and the Tesla Energy vision broadly has been extremely positive.We are now preparing our supply chain and production teams to start volume builds on these new products in Q3. Production will begin at the Tesla Factory in Fremont, and in Q1 2016 will expand into the Gigafactory and accelerate significantly.

The total addressable market size for Tesla Energy products is enormous and much easier to scale globally than vehicle sales. We are pursuing product certification in multiple markets simultaneously and plan to ramp deliveries in the US, EU and Australia in Q4. When combined with low cost renewable energy, Tesla Energy batteries provide an achievable pathway to a 100% zero carbon energy system."

From conference call after report on Tesla Energy: Musk - Tesla has 38,000 reservations for Powerwall and 2,500 for Powerpack already (Powerpack is 10 Powerwalls) so they are so not worried about Solar City not picking up the 7 kWh Powerwall product (just the 10 kWh backup unit).  Powerwall is sold out through the middle of next year.

Margins will reach 20% once production comes from Gigafactory in Nevada.

Cycle data on 10 kWh backup and 7 kWh daily Powerwalls: Back up power chemistry (10 kWh unit) akin to Model S, while daily (7kWh unit) chemistry is nickel manganese cobalt.  So, 60-70 cycles expected for 10 kWh back-up unit per year, while the 7 kWh daily battery would obviously be 365. The company expects 7 kWh daily unit to have lifespan of 15 years or 5,000 cycles.

Tesla Model 3 Debut

From conference call:  Musk - Tesla is hoping to show off Model 3 in March of next year, but "don’t super hold me to that month." Production of the Model 3 closer to the late 2017 time frame

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Shares traded up about 2%-3% in early trading Wednesday night after the report was released, and mostly flat to up 2% on Thursday.  Check for a real-time quote here.