Tesla Reports Q2 Earnings, Beats Street Estimates

JUL 31 2014 BY JAY COLE 24

As Tesla Announces 2nd Quarter Earnings The Company Looks To New Markets For Future Sales (Photo: Recent Model S Launch In Hong Kong)

As Tesla Announces 2nd Quarter Earnings The Company Looks To New Markets For Future Sales (Photo: Recent Model S Launch In Hong Kong)

After the close of business on Thursday, Tesla reported second quarter earnings.

Overall the company netted a 11 cents per share profit (ex-items) or $16 million on an automotive gross margin of 26.9%.  The street had expected earnings of 4 cents per share.

In total 7,579 Model S sedan were delivered between April and June, which was in line with the company’s previous guidance of 7,500 units.  More importantly the company re-affirmed 35,000 sales target for the year – which means the company will have to average about 10,500 EVs sold the next two quarters.

Tesla Model S Sales Exceeded Earlier  7,500 Unit Estimate For Q2

Tesla Model S Sales Exceeded Earlier 7,500 Unit Estimate For Q2

On a GAAP basis the company lost 50 cents per share in the quarter, or $62 million.  The street had been looking for a loss of $55 million.

As for revenue, analysts were looking for a number around $824 million (non GAAP), in reality $858 million was realized as compared to $551 million in Q2 of 2013.

Of that $858 million, $23 million came from Daimler and Toyota:

“Automotive revenue for Q2 includes $23 million of powertrain sales to Daimler and Toyota, reflecting the start of production deliveries to Daimler for the Mercedes-Benz B Class Electric Drive and the wind down of sales to Toyota for the RAV4 EV.”

A year ago, Tesla reported a gain of 20 cents in Q2 of 2013.

Of note just before the quarter closed, Tesla announced they had reached an agreement with long-time battery supplier Panasonic to partner with them in the company’s upcoming Gigafactory battery plant.

“According to the agreement, Tesla will prepare, provide and manage the land, buildings and utilities. Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval.”

Giga Factory Graphic

Earlier Tesla Gave Some Context To The Size Of Upcoming Gigafactory

And while a year ago Tesla was introducing the Model S to Europe, for this quarter an even larger/more important market was penetrated – China – as Tesla Motors made its first official Model S deliveries in the country on Earth Day April 22, 2014. (some video of that event can be found here)

Tesla's Fremont Assembly Facility Is Currently Being Upgraded To Increase Model S Production By 25%

Tesla’s Fremont Assembly Facility Is Currently Being Upgraded To Increase Model S Production By 25%

Tesla had guided Q2 production of the Model S between 8,500 and 9,000 cars, and pretty much split that number with 8,763 built.

Currently, production at Tesla’s Fremont assembly facility has been idled (and it will be through August 4th), the first time in the company’s history – but that is to make adjustments to allow for the inclusion of the upcoming Model X SUV , and to allow for a 25% increase in production capacity on the Model S.  Tesla hopes to start delivering the Model X in “early 2015”.

The company states that its Model S production capacity during the quarter was about 800 units per week, and will be north of 1,000 units per week in the fall.  Tesla guided Q4 production to be around 13,000 units.

Gigafactory Update

After details started to spill out about a potential Gigafactory site in Nevada earlier this week, Tesla confirmed that they did indeed break ground in that state.

“In June, we broke ground just outside Reno, Nevada on a site that could potentially be the location for the Gigafactory. Consistent with our strategy to identify and break ground on multiple sites, we continue to evaluate other locations in Arizona, California, New Mexico and Texas. The final site for the first Gigafactory will be determined in the next few months, once we have full visibility and agreement on the relevant incentives and processes for enabling the Gigafactory to be fully operational to meet the timing for Model 3.”

Current and Future Demand

Tesla Opened Its 156th Supercharging Station In Q2 (Photo: 100th Above)

Tesla Opened Its 156th Supercharging Station In Q2 (Photo: 100th Above)

Tesla continued to express the difference between deliveries and demand, saying that production was still constraining the amount of cars that are hitting road around the world.

“The number of deliveries in a quarter is influenced by three main factors: our ability to increase production; the allocation of that production among our North American, European and Asian markets; and the need to fill the in-transit pipeline for future deliveries in each region.

This quarter, for example, we delivered 7,579 Model S vehicles, slightly ahead of guidance and up by more than 17% sequentially. However, even though we increased both production and deliveries, average global delivery wait times increased because our production growth was unable to keep pace with increased demand.”

Much of the Tesla’s future success (and forecasts) lies in how well the company’s products are accepted in Asia, but the company did still put a brave face on North America and Europe…without actually disclosing the specific results for those regions:

“In both North America and Europe, Q2 Model S orders increased sequentially at a much faster rate than for the rest of the automotive industry.  Accordingly, we believe these markets remain under-penetrated.”

It should be noted that stating the company is out-performing the existing industry’s single digit growth rate (currently 4.3% for the year) is like saying you can beat an old lady in a 100 meter sprint… and is likely not sitting too terribly well with analysts.

Expansion: Supercharging, Stores & Service

For the balance of 2014 Tesla says that the greatest expansion areas for stores and service centers well be:

  1. China
  2. Europe
  3. United States

“We also continue to expand our Supercharging network, with the introduction of our Superchargers in Canada (video of that can be found here) and a substantial increase in the rate of deployment in Europe and China. Globally, we just energized our 156th Supercharger, which makes our network both the largest and the most rapidly growing fast charging network in the world.”

Model X

We aren’t quite sure if the Model X delivery date slipped during this report, but it certainly didn’t get any closer.  We can say that the prototypes are a lot closer though.

“Development efforts remain on track for production of Model X in the spring of 2015. We anticipate having operational Alpha prototypes ready by next week in order to confirm design intent and Beta prototypes to be ready later this year.

Guidance

Because of the 2 week plant shutdown to expand capacity, Tesla expect to only produce about 9,000 Model S sedans in Q3 – the company says without the shutdown that number would have been around 11,000 units.

“After considering our planned production and the need to have more vehicles in transit (including the new RHD models), we expect to be able to deliver about 7,800 Model S vehicles in Q3. Without the planned factory retooling shutdown, Q3 delivery expectations would have been approximately 9,500 vehicles.”

This Q3 estimate is lower than originally expected, and of course forces us to do “the math” on the necessary Q4 deliveries to hit the company’s overall 2014 target of 35,000 units.

Sales (real and forecasted):  6,451 (Q1) +7,579 (Q2) + 7,800 (Q3) = 21,830

In other words, Tesla hopes to move over 13,000 EVs in the 4th quarter, almost double anything they have sold in any quarter before.  Of note Tesla expects to lease about 300 cars in Q3, but much more in Q4 – look for a more competitive leasing program to be announced during the second half to help get them there.

Separately, Tesla expects non-GAAP automotive gross margin in Q3 to be about consistent with the prior quarter which was a solid 26.8%.  By year’s end 28% is anticipated.

Share were off marginally in early after-hours trading.  (real time quote)

The full 8K current report can be found here.

Categories: Tesla

Tags:

Leave a Reply

24 Comments on "Tesla Reports Q2 Earnings, Beats Street Estimates"

newest oldest most voted

From the investor letter:

“Provided that we execute well and there are no serious macroeconomic shocks, Tesla’s annualized delivery rate should exceed 100,000 units by the end of next year.”

Wow.

In order to do that, they’d have to take their new 1,000 unit/wk production line and build an identical one to get production to 2,000 units a week.

Also they fess up to being the ones behind the Reno Business Park land excavation. So we know that is a Tesla thing and not a pizza joint.

Rob Stark

The old line had a capacity of 800 per week.

New line has a capacity of 1200 per week.

Old line also upgraded. New line capacity is 2400 per week starting Aug 4.

The bottleneck continues to be battery cells, although Panasonic is delivering more than ever before. Next year Samsung will help supply Model X battery cell needs.

TomArt

Darn – I had my heart set on cheap pizza!!

GeorgeS

Glad to hear they are expanding their lease program.

pjwood

..and accounting for it the same way GAAP / Non-GAAP. It give credit to why the buyback program should not be.

Nevada is confirmed to still be in the running. How about the others? 🙂

Anthony

That should really be UNR’s mascot, not UNLV, since it’s going to be near Reno and nowhere near Vegas.

James
“It should be noted that stating the company is out-performing the existing industry’s single digit growth rate (currently 4.3% for the year) is like saying you can beat an old lady in a 100 meter sprint… and is likely not sitting too terribly well with analysts.” You know what I say about that? Who gives a flying duck what analysts think?! Analysts have been wrong about so much over the years you could fill the Library Of Congress with their misses. This is new broken ground, new territory – it’s a hyperloop and they’re looking at steam locomotives. Last I heard, today the stock market was tanking. Meanwhile Tesla is soaring. I know a big ICE car guy who is chuckling at me right now as he blows by my house daily in his customized 1000hp Viper. I email him tons of Tesla news and goad him weekly to go test drive a Tesla. While he laughs at me, he also invested in Tesla. I think he may be laughing all the way to the bank. Hopefully, he’ll drive there someday in an electric car.* * and hopefully, if Tesla of today becomes the Microsoft of yesteryear, he’ll reward me… Read more »

Anyone who puts their money in this scam should care. Why not just spit out the actual groth numbers? If Q1 sucked for ModelS orders, a bit of increase in Q2 is meaningless.

Musk said, they encourage modelX buyers to buy modelS instead. Tell you right away, that they have too many of modelS sitting in their parkign lots to offload.

Rob Stark

Tesla does not have parking lots. They have a few spaces in malls where they have their stores.

They encourage people to buy Model S because they can have that delivered quicker and collect the money faster than the potential buyer ordering a Model X now and having it delivered Q3 or Q4 2015. They start delivery in Q2 but already have more than 13k orders.

Anybody with an IQ above 70 can see that Tesla will be a smashing success.

Rob Stark

BTW All the quarterly sales figures are right there for anybody to read.

Guidance remains 35k deliveries for this year vs 22.5k for last year.

James

As an old guy, I remember living in Seattle in those glory years of Microswift. Articles in the paper naming the Redmond, WA firm “the velvet sweatshop” for hiring hoards of college students out of school and working them to death as they slept in cots, afraid to go home and shower because they’d disappoint President Bill, or Paul Allen. Wild things were happening akin to a modern Gold Rush as they drank free soda and shot Nerf guns at each other on breaks.

A guy drives up to my neighbor cleaning his gutters and shouts: “Hey, John – my son got out of college two years ago and moved out of our basement in January. He stopped by the house today and informed me that after two years at Microsoft he’d just made his first million dollars!” LOL!

Ah, those were the days – and WHY OH WHY did I not buy Microsoft stock?!!!!

Tesla reminds one of those days…

James

Today, Microswift is hiring hoards of Indians and shipping their families to Seattle – it’s called “in-sourcing”. It boggles the mind as one spends time to the east of Seattle and sees the shopping malls filled with people wearing traditional garb and driving BMWs…

I love this time when Tesla is a babe, and they’re hiring thousands of Americans. We’ll most likely see a Tesla one day pulling what Microsoft is doing today…Of course, there’ll be much China manufacturing for the Asian market and so on…

So today – is a grand time of expansion and growth for an American company – in America.

P.S.- Soon, we can buy an American-made car, made by Americans and not feel there are better vehicles manufactured elsewhere in the world.
And, by “we”, I mean those who cannot shell out $100,000 clams for a car.

evnow

“It boggles the mind as one spends time to the east of Seattle and sees the shopping malls filled with people wearing traditional garb and driving BMWs…”

Never seen that. May be passengers wear traditional Indian dresses – not drivers ? BTW, are you a racist ?

Mike I

From the investor letter:
“Our customers have now driven the Model S for 394 million miles globally…”
“Since inception, our customers have driven for free nearly 32 million Supercharged miles…”

So, barely over 8% of Model S miles are powered by Superchargers.

Mikael

Pretty much as expected. It will probably rise to 10-15% during next year when the super charger network is more widespread.

pjwood

23mm in Mercedes and Toyota drive train revenue. Sort of on-topic…I drove the B-class last night. It makes the Volt feel European. Why soooo soft, Mercedes? Regen felt nominal across +,-, very nice inside, good off line, less so rolling. High CUV seating, maybe 2″ more rear leg-room, short front bench, more cushion. Side mirrors same color. No range+. Merc is now down-market, but I think they added the right value. The jog wheel between the seats imitates Audi’s MMI well, better than leaning forward (long legs). They can’t be looking at volume, with this dealer expecting ~6 for Q3. Did somebody drop a pin?

Tesla Fan

Took my smart in today for the 10k battery check/1 year service. They had a B-Class in the showroom. Sat in it, yes its nice interior, like all mercedes, but the exterior is ugly.

And it has the same noise maker as my Smart ED.

CherylG

“On a GAAP basis the company lost 50 cents per share in the quarter, or $62 million. The street had been looking for a loss of $55 million.”

Missed the street estimates by 13%. Twice the loss on less than twice the revenue of Q2 2013.

The cash flow numbers were surprisingly bad, worst quarter ever. Especially bad considering they’ve only spent money moving tumble weeds in Reno and Beta prototypes of the X aren’t even in existence yet.

Cash flow actually looked good.
———
“As for revenue, analysts were looking for a number around $824 million (non GAAP), in reality $858 million was realized as compared to $551 million in Q2 of 2013.”

Anon

Thought we had long ago established CheryG was nothing but an anti-Tesla Troll…

CherylG

LOL, I mention free cash flow and you quote revenue numbers. ROFL

Wow, amazing. Are fanbois really this ignorant of simple financial basics?

It seems Fanbois only have enough brain power to look at a small item and then extrapolate that to some grand conclusion that fits their personal bias.

Safest car in the world!!!

Safest small car in the US !!!

A loss is a profit !!!!

Revenue equals free cash flow !!!!!

Phr3d
OH, so you mean us ‘fanbois’ focus on particular points, ignoring alternative and verifiable data.. NOW I get it.. Like when you reported a bazillion times that Consumer Reports had removed the Tesla from recommended.. Then said the replies to you were ‘obviously’ from those that didn’t have Consumer Reports subscriptions, then said NOTHING when the CR subscriber asked you What the HELL are you SMOKING? since what you reported was patently, FALSE? Prowling FALSE information in hopes that new readers will actually believe your unverifiable claims is patently-low behavior (and actionable, as if I believe you would care). To Tom: I do empathize with your workload here and Thank You for your extraordinary efforts, but IF a new reader were to try and ‘catch up’ with older articles, the likes of SeeThroughCherylGValue -could- literally Splatter old news article comment sections with their uhmm.. questionable information. I can only hope -as you like to keep the comments as un-moderated as possible- that You will be willing to refute ludicrous claims, over and over. The Humbly offered alternative is tracking of comments on articles, on by default @ reply, so the users with no axe and a modicum of decency will… Read more »
ffbj

Yes, Tesla is on a roll. Beating estimates, preparing sites for giga-factories, going gang busters in China. Now Musk says that he will be keeping his cards more close to the vest or words to that effect. I guess the aw shucks demeanor will now fall by the wayside too. My guess is that some bean counters or corporate types have thought his open mike sort of approach to telling everyone what they were doing will change to more normal secretive business practices.
Evidence that this change is already occurring would be the great pizza factory controversy, exposed by the comments on this site.