Tesla 4th Quarter Results Not Good: Earnings And Production Miss, 40 kWh Model S Delayed

FEB 20 2013 BY STATIK 32

Few Quarterly Reports Have Been More Anticipated Than Today's From Elon Musk And Tesla

Few Quarterly Reports Have Been More Anticipated Than Today’s From Elon Musk And Tesla

Tesla today reported a wider than expected loss of 62 cents a share (the street estimate was for 53 cents), while revenue for the 4th quarter came in at $306 million ($294 million from auto sales), about $8 million higher than expected.

But what everyone wanted to know was, would Tesla be able to hit benchmarks promised from their last report on November 5th, 2012,:

“Given Tesla’s rate of progress over the past few months, we are confident of being able to deliver 2,500 to 3,000 Model S vehicles in Q4 and over 20,000 in 2013.”

Tesla First "Real" Quarter Result Was Weaker Than Expected

Tesla First “Real” Quarter Result Was Weaker Than Expected

The short answer:  No

…and the shares took a nose-dive in the day after the announcement falling almost 9%.  This  after falling about 2% in the regular trading session yesterday. (Real-time quote here)

Tesla says they delivered about 2,400 cars in the fourth quarter, bringing their yearly total up to just over 2,650.  Overall production of the Model S was said to be at 2,750 units for Q4 and 3,100 overall.

Tesla still plans to deliver 20,000 Model S sedans in 2013, but warns that it likely can only deliver about 4,500 in Q1 of 2013.

  “…we gave the manufacturing team the first week of the year off to celebrate their accomplishments during 2012.” 

To us, this reasoning does not past the smell test, and the miss is more likely affected by Tesla’s attempt to “work the system” and pull 2013 deliveries into 2012 by asking customers to complete transactions before they actually had taken possession of their cars, in order to boast 2012 sales.  Sales that they knew were coming up short.

Tesla Model S

Tesla Expects To Deliver 4,500 Model S EVs In Q1 Of 2013

Statement From Elon Musk on Q4 deliveries:

“During the quarter, we delivered approximately 2,400 Model S vehicles. We delivered the remaining North American Signature Series cars and shipped exclusively cars with the 85 kWh battery pack. We also saw strong demand for options such as the Performance version and Tech Package. Finally, we sold most of our remaining Roadsters during the quarter.”

Tesla did pull ahead the expectations for profitability (on a non-GAAP basis), saying “first profit now expected Q1 2013 versus prior guidance of late 2013.”

Tesla notes the company received about 6,000 new reservations for the Model S in the last quarter of the year, however cancellation rates were also extremely high, and Tesla has yet to achieve the quarterly reservation rate necessary to sell 20,000 vehicles on an ongoing basis.

The forecast for current and future reservations were also not that great:

“New reservations continue at a steady, although slower pace in Q1 2013, as compared to December, due in part to the pull ahead of reservations into Q4 by customers seeking to avoid the price increase. Q1 cancellations are likely to remain elevated as the remaining older reservation holders are invited to configure their vehicles within a set time frame or pay the higher price just like new reservation holders.”

Tesla Hopes The Upcoming Model X Can Assist In Meeting Production And Profitability Forecasts

Tesla Hopes The Upcoming Model X Can Assist In Meeting Production And Profitability Forecasts

Overall, Tesla says that first-quarter gross margins will be in the mid-teens and rise toward its target of 25% in the second half of the year.

Weighing heavy on the company is the fact Tesla is down to about $201.8 million in non-restricted cash after making their first  loan repayment to the U.S. Department of Energy. For the fourth quarter of  2012, cash from operations plus capital expenditures was -$102 million.

For 2012 year end, Tesla had 32 stores and galleries worldwide, and plans to open 15 to 20 more stores and galleries this year.  Tesla will start European deliveries of the Model S this summer, with  Asian deliveries later in 2013.

Also in the “not good news” category is the news that Tesla notes that the delivery of  their entry-level 40 kWh Model S  is now not expected to begin until “later this summer.”

If interested, you can read the results, and Tesla’s shareholder letter here, or Tesla’s actual 8-K filing

Categories: Tesla

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32 Comments on "Tesla 4th Quarter Results Not Good: Earnings And Production Miss, 40 kWh Model S Delayed"

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Anton Wahlman

I disagree. The 20,000 goal for 2013 remains unchanged. 4,500 in 1Q is consistent with that goal. Profitability is now 3 quarters earlier, which is the big news. This is an incremental positive. The whisper must have been through the roof, explaining the quick stock reaction, stock selling off 8% or so. I imagine that will reverse in due course, as people absorb the news.

Mark H

Good report. No negative spin, just the news. If you followed them closely, there really aren’t any big surprises here are they? Automotive start up of this scale is not going to be easy. They are going to have manufacturing issues, product issues, sales issues, distribution issues, media issues, thus resulting in stock issues. 2013 is gonna be a tough year. Maybe the same in 2014. Still, they have a great product. Not a perfect product, but one their customer base loves and the envy of most EV owners as well as many wanna be owners, myself included. I still hope to make the Model S my second EV. I am standing a safe distance from the track today for if you connected the dots of nothing more than what has been written on InsideEvs, you had to have seen this train coming…

Sam Horner

Tesla 18650 batteries blow up like Fiskers when they get wet or overload- BAD THING

No REAL car company only sells a few thousand cars after over a decade of trying to sell the product: BAD THING

Most of the Tesla’s sold so far were bought by Musk’s friends or investors to help cook the books to create false demand: BAD THING

The brand of Tesla has been destroyed by MUSK being such an arrogant, egotistical dick: BAD THING

Each and ever car has come off the production line with problems: BAD THING

Tesla paid off government officials to get their free “loan” from taxpayers: BAD THING

TESLA: BAD THING

Spin

Don’t hold back, tell us how you really feel.

Foo

Do you have any evidence for any of these claims?

Richard Joash Tan

and Sam Horner doing all the negative things about Tesla = SUPER BAD THING!!!!

Richard Joash Tan

“Tesla 18650 batteries blow up like Fiskers when they get wet or overload- BAD THING”

my response: Tesla did not blow up batteries.

“No REAL car company only sells a few thousand cars after over a decade of trying to sell the product: BAD THING”

my response: Model S sales have surpassed Volt sales in January

“Most of the Tesla’s sold so far were bought by Musk’s friends or investors to help cook the books to create false demand: BAD THING”\

my response: Tesla is cash flow positive

“The brand of Tesla has been destroyed by MUSK being such an arrogant, egotistical dick: BAD THING”

my response: the brand has a lot of good experience and the Model S has more awards

“Each and ever car has come off the production line with problems: BAD THING”

my response: Tesla Production has ramping up for quality checks

“Tesla paid off government officials to get their free “loan” from taxpayers: BAD THING”

my response: Mitt Romney, the republican that called Tesla a “loser” was lost to Obama, which he was reelected last November after Motor Trend named the Model S car of the year

“TESLA: BAD THING

my response: AND YOU ARE A BULLSHIT!!!

James

Controversy = GOOD THING!!!

Sam Horner’s right of free speech = GOOD THING!!!

Sam Horner’s assumptive blather = BAD THING!!!

Sam Horner’s handle on fact = BAD THING!!!

SAM HORNER = WILD THING with no real BASE ON THE FACTS.

WILD THINGS = AWESOME MOVIE!!!

Bonaire

How old are you – 85? 15?

Bloggin

It seems to not matter much as to who reserved the car, but how many actually are purchased. And people are as emotional about car reservations as investors are with their investments.

Canceling a reservation does not necessarily mean the person does not want the car, many could just want to spend the case on something else for now, or put it where it can earn interest while waiting for production to ramp up so they can buy when it’s available.

And investors know a good thing, and don’t want to be on the wrong end of Tesla, when production really gets started and stock takes a spike. Their best bet is to grow some balls, strap on a cup and ride it out.

I think the stock price reaction is mostly because Tesla lost 17% more than was predicted. Overall there was no real scary news here. Seeing what their margins look like after 3 months of full production will be much more telling.

The most worrisome item about this report was the lack of guidance for 2013. There has basically been nothing other than what was promised 2 years ago of 20k delivered with 25% gross margin. It is unclear if Tesla can expand the stores, service centers, and supercharger network all while turing a profit for 2013. It seems something has to give.

Roy_H
Production almost never matches expectations, something always comes up to throw a wrench into things. Q4 was never expected to be profitable, and the loss was more than expected. Musk has always pushed the limits, and this means spending the last dime to generate future sales. The supercharger network is expanding rapidly, how much does that cost? New stores, more expenses. If he was focused on providing high near term profits for investors, the easiest way would be to go slow on the expansion of stores and superchargers. When Tesla does turn a profit, it will be small because all extra money will go into more superchargers and designing/building the next products. Tesla is a bad investment for investors that expect short term profits, long term Tesla aims to be a much bigger company, then your shares will be worth more. I think that the 40kwhr model was a mistake and would encourage anyone with a reservation for one to upgrade to the next model. You will appreciate the knowledge that your battery pack will last longer, and when it does degrade in several years it will still have very useful range. It is an “entry level” model and if… Read more »
James

The 40Kwh Model S will still have no peers.

This Model S will be timed perfectly for the installation of many
new Superchargers – making the shorter range less of an issue.

The 40kwh S can’t come soon enough.

Jeff

Except for the fact that the 40kWh Model S is incompatible with the Supercharger network. It’s essentially an “in town” car.

No doubt Tesla has serious potential to combine efficiencies and earn a reputation as a real leader in the EV segment, but their success depends on a lot of unknowns at this point. Hopefully a profitable 2013 can give them enough of a cushion to innovate and strengthen their weaknesses. Keep in mind, now they’ll have a growing secondary market with aging and progressively weakening batteries to contend with– dealing with recycling, warranty, and creating a market for the reuse of these batteries is one of many issues they’ll have to face.

It seems Elon can juggle pretty well, and this year will be a critical year to watch how Tesla copes with all the pressure. I wouldn’t bet against them.

Mark H

Not so much an “in town” but not a “coast-to-coast” car either. It will be used the same as all other BEVs on the market today (with a little more range) which just proves there is a market. More of a “daily commute” EV. The 85kWh stands alone as a long distance EV.

I don’t think the secondary market for any EV batteries is going to be a problem. Several companies have looked into converting them to battery backup systems. As power incentives for pv systems diminish, a natural market will occur. I suspect that the lowering cost per kWh will make the resale value of the EV battery pretty low, but for the most part I think most EV adopters think more about the cost of a new battery opposed to what they can sell there 70-80% capacity used one. A reasonable percentage of EV owners have a grid tied pv system, myself included, and they very well may keep the battery for their own usage.

GeorgeS

If Tesla had more revenue than expected (306 million vs 294) but a bigger loss of 62cents / share versus 53 cents per share then what expenses were higher than they predicted. ??

GeorgeS

It’s all very complicated. All I know is that cents/share can be a misleading number. (especially in the case where a company is selling assets).

If total revenue was higher but revenue from vehicle sales was lower what caused higher total revenue?

John

If anything I’d say the 85kWh demand is encouraging. I’m sure their margin is greater on cars going out the door with tech package, performance and the big battery. I have a 40kWh reservation, and there’s zero reason for me to upgrade to a bigger pack. My wife’s CT200h can take us on our road trips the 4 days per year we do that. The 40kWh is still almost as fast as my G37S, but has all the obvious benefits of a BEV. Too bad it’s delayed but I understand they need to make the higher margin cars first. At some point they will have to either deliver the 40’s or deliver a refund to the 10% of reservation holders patiently (or not so patiently) waiting for their cars. It would probably be a reasonable business decision to cancel them, although I hope they don’t. From my point of view the 40kWh with some nice options is the best deal. And Sam, go crawl under the rock you came from and try switching off the talk radio.

Mike

This company convinced customers to give them $294 million for their electric cars in four months. I find that impressive, no matter how much money they’re hemorrhaging.