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Tesla Buoyant After 2012 Model S Launch, Despite Losses

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2012 Tesla Model S, brief test drive, New York City, July 2012

2012 Tesla Model S, brief test drive, New York City, July 2012

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After nothing to sell for nearly six months, an age of anticipation, media hype and short, chaperoned rides, Tesla began official deliveries of its all-electric 2012 Model S sedan just over a month ago.

So its hardly surprising that the fledgling car company has just posted net losses of $105.6 million for the second quarter of 2012, up from $58,9 million for the same quarter last year. 

Losses widen, revenue down

According to the official financial results released by Tesla [NSDQ:TSLA], sales revenue during the same period has dropped by 54 percent to $27 million.

Of that $27 million, Tesla reports, $22 million came from automotive sales, up by 15 percent from Q1 2012. 

While some of that will have been raised from early Model S sales, Tesla also sold 89 of its remaining Roadsters to International customers.

Research revenue down

Because the 2013 Toyota RAV4 EV is now entering production -- a car Tesla designed the drivetrain for -- Tesla reports its developmental revenue has dropped dramatically compared to its previous quarter. 

However, with a new project now underway to build an all-electric drivetrain for Mercedes Benz, this should be a temporary glitch. 

Tesla also notes that it received some of its Q2 revenue from powertrain component sales to Toyota for its soon-to-launch electric crossover SUV. 

DOE Loans

In its official investor documentation, Tesla reports that it plans to draw the remaining $33 million in low-interest loans available to it under the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing Program “in the next few months”. 

However, with a waiting list of 10-11 months for its 2012 Model S, and the top-spec 2012 Model S Signature Series already sold out, Tesla is predicting that it will be cash flow breakeven by the end of 2012, commencing Loan repayments as early as December 2012. 

Model S on track

Both in its official financial report, and in its subsequent earnings call, Tesla was keen to reiterate that its production plans for 2012 remain at 5,000 cars, despite a drop in scheduled production during the third quarter

CEO Elon Musk said during the earnings call that the automaker plans to to make “at least 20,000” Model S cars next year, with the possibility of a second shift to push that to 30,000 if needed. 

With more than 11,500 confirmed orders for the all-electric sedan, Musk isn’t shy about his expectations. 

“This accelerating pace of reservations makes us confident that demand will surpass 20,000 Model S units for full-year 2013 deliveries,” he is quoted as saying in the report. 

Next few months critical

With Tesla buoyant about the coming months, the automaker is hoping to transition from a small, boutique automaker into a slightly more mainstream automaker. 

However, it’s worth noting that even with production volumes of 30,000 cars a year, Tesla is likely to remain one of the smallest volume automakers in the U.S. for many years to come. 

Regardless of production volumes however, the next few months -- including the continued rollout of the 2012 Model S -- remain critical to the company’s future. 

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Comments (9)
  1. All I need is a test drive then I'll put down my deposit. But after calling my states only dealer I found out that the Get Amped Tour is for reservation holders only, and was told that they might get a car for public test drives later this fall. The Amped Tour in my state starts soon it's going to last three days and I can't go. I'm starting to get mad at the poor communication skills of the Tesla stores, the guy I talked to even told me that the Model S beta has been in my local area twice this year but it was never announced on Tesla's website and the store in my state never called despite the fact that they have all my contact info. Tesla's lack of traditional dealerships is starting to concern me I've never had trouble like this before.
     
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  2. CD, try to get in contact with some folks at the Tesla Motors Community forum. I've seen some folks able to get in as a reservationist's guest, and eventually have a test drive, themself.

    http://www.teslamotorsclub.com/forumdisplay.php/87-EVents
     
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  3. I'll check it out, thanks.
     
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  4. You can try and register for a test drive as well http://www.teslamotors.com/own/testdrive
     
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  5. Seems weird to call investments "losses", but maybe it's correct from a bookkeeping viewpoint. Guess you need to "loose" a lot of money before you can make a lot of money.

    About that "drop in scheduled production during the third quarter": according to Elon Musk Tesla "never actually reported what third quarter production will be. The only number we talk about is the production target of 5,000 this year".

    http://www.plugincars.com/elon-musk-talks-several-more-years-helm-123364.html

    It would appear then that story was pretty much a hoax, no doubt brought into the world to support speculation games.
     
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  6. The way financials are reported, typically inventory and capital expenditures are not show in the P&L statements. You need to look at the Balance Sheet. Doing so on Tesla website you will that their long term debt increased by about $156M. So when Tesla has to pay out for tools and equipment that is not shown on P&L statement, but that is real cost of business. I think 3rd Qtr results will be very telling. I believe the Model S was not ready for production and Tesla is spending a lot of money building these cars as they try to get things straightened out. There is nothing Musk can do but play games with the reality of life, something is thinks he is above. Let's see his next quarter results!
     
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  7. Blah blah blah, Richard Marks hates Elon, blah blah blah.
     
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  8. I don't think this quarters numbers are particularly interesting. Tesla has already indicated this period is about slowly ramping up production so the numbers will reflect a period of heavy investment and low revenue.

    4th Qtr results however should be interesting. That's when reputations are bolstered or tarnished. Elon Musk's reputation for promising 5000 units produced by the end of the year and many a sceptic's reputation for basically calling him a lying windbag who should not be trusted to deliver as promised. It's going to be interesting....
     
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  9. While I have some doubts long term about Tesla's viability as an independent OEM, I don't think the next quarter will make much of a difference unless production volume is considerably worse than publicly stated. If the global economy takes a step backwards, all bets are off, but then again, that's the same for ICE OEMs in some cases, too.

    I'm more worried about Tesla in 2014 or 2015, especially if the economy is stagnant & investment is stifled as a result. But Tesla is doing a solid job becoming as strong as possible before then. As long as outside investors support Tesla, a lack of profitability can be overcome in the initial years. But Tesla needs to be strong later once BMW, Audi and others finally join the EV club in earnest.
     
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