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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