Analysis, Auto, Business, Hardware, VR World

Tesla Motors Reports Record Earnings, Guides 3Q Down

Tesla Motors Tesla Motors

Tesla Motors [NASDAQ:TSLA] today reported their earnings for the second quarter of 2014, beating many analysts expectations by delivering a record 7,579 Model S vehicles in the quarter as well as producing a record 8,763 Model S vehicles in the quarter. Non-GAAP earnings were $16 million dollars (broken down to $0.11 EPS), while GAAP earnings (loss) was a loss of $62 million or a loss of $0.50 cents per share. Tesla Motors also cautioned that they expect the third quarter revenue and overall production to be lower than initially expected due to the retooling of the Fremont NUMMI plant for higher volume Model S and new Model X production. They also said that this new Model S/ Model X assembly line is planned to begin operation next week. However, they did not change their guidance for the year, as they expect that the fourth quarter, Q4 2014, should make up for any lost production in Q3. As such, they are still on track for their expected figure of 35,000 deliveries in 2014.

They also talked about the groundbreaking at the Reno, Nevada site for the Tesla Gigafactory, however they still have made it clear that the site has not been finalized yet, even though they’ve broken ground in Nevada. On the topic of reduced production, they still expect to product 9,000 vehicles in Q3, and without the retooling they expect that they would be producing 11,000. They expect to deliver 7,800 vehicles in Q3, and without the retooling and production stoppage they expect that they would have delivered nearly 9,500 vehicles, which may explain investors’ current unhappiness with the stock. Tesla’s stock is currently down 2 1/2 percent, on top of being down 2 1/2 percent in normal trading. Obviously, most of this is not really news, but Tesla is now quantifying exactly how bad their expected retooling slowdown is. Elon Musk will very likely calm investors down with some news about the Model X deliveries or increased average sale price as a result of shipping the Model X in Q3 and Q4 of this year.

The news that Panasonic is also investing in the Gigafactory is also big news for Tesla Motors, but that officially came out yesterday which may partially have been to try to stem the blow from reduced Q3 product numbers. But even so, Tesla clearly expects to deliver as many vehicles as they had promised, which makes the long term outlook better than the quarterly one. Not to mention, Tesla Motors has already beaten earnings expectations for Q2 2014, even though they’re still technically operating on a GAAP net loss (which will likely change by the end of this year).