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Tesla Earns 'Modest' Q2 Profit, Delivers 5,150 Cars, Boosts Margin On Carmaking

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Tesla owners & supporters gather in Statehouse in Austin to support company [photo: John Griswell]

Tesla owners & supporters gather in Statehouse in Austin to support company [photo: John Griswell]

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Tesla Motors [NSDQ:TSLA] slightly increased its profit in the second quarter, and delivered more Model S electric cars than last quarter.

The company released its Q2 financial results this afternoon, with net income of $26 million compared to $15 million for Q1.

The company said it delivered 5,150 Model S vehicles from April through June, an increase over the 4,900 sold in January through March--and a much higher number than the 4,500 it had projected three months ago.

13,000 Model Ses

That brings the total number of Model S cars on the road to more than 13,000; together they have covered roughly 60 million miles.

That number makes the Tesla Model S the fourth most popular plug-in vehicle on U.S. roads, after the Chevrolet Volt, Nissan Leaf, and Toyota Prius Plug-In Hybrid--all of which have been on the market longer.

The company said demand for the Model S in California remained strong, but demand outside the state grew at twice the California rate--meaning it is able to expand sales across a broader geographical base.

More than 30 percent of the vehicles delivered in Q2 were financed, using the company's announced and then modified lease-like financing scheme.

500 cars a week

Model S production is now running at "almost 500 vehicles per week," the company said, notably higher than its original plan for about 400 a week through 2013.

That rate allowed Tesla to build "several hundred" additional cars for use as customer test cars and service loan vehicles domestically, as well as the start of European deliveries.

And, in fact, the company delivered its first Model S in Europe just today, in Oslo, Norway.

First 2013 Tesla Model S delivered in Europe (Photo: @TeslaMotors on Twitter)

First 2013 Tesla Model S delivered in Europe (Photo: @TeslaMotors on Twitter)

Enlarge Photo

Tesla said it expects to deliver close to 800 vehicles in Norway alone by the end of the year, and that orders from European customers have risen every month since February.

And it projected that if orders from Asia--where it will expand after establishing itself in Europe--match those from North America and Europe, the company could be building as many as 40,000 Model S cars a year within 18 months.

Tesla now has 30 Tesla Stores in North America, along with eight in Europe and three in Asia, and it will open a few more stores this year, including its first in China.

However, the company says it will focus more on opening additional service centers, since in regions where it is established, it can sell additional cars from existing stores if more service centers are provided.

Supercharger expansion

The company has more than doubled the number of Supercharger locations since the beginning of the year, with more to come--including its first installations of the free quick-charging stations in Europe.

Tesla noted that new Supercharger corridors include Portland to Vancouver, St. Louis to Chicago, and several other city pairs in the Northeast, Florida, and California.

It will also increase the number of charging stations, adding the ability to quick-charge as many as 10 cars simultaneously at popular Supercharger locations--likely those in on the heavily-traveled San Francisco to Los Angeles route.

Gross margin up

Tesla said its gross margin improved from 17 percent in the first quarter to 22 percent last quarter, and its automotive gross margin (excluding revenue from the sale of zero-emission vehicle credits) rose 8 percentage points.

The numbers cited are not calculated according to Generally Accepted Accounting Principles (GAAP), largely because those principles, the company says, don't correspond to its cashflow as a growing automaker. 

Nonetheless, Tesla said it would also start reporting its financial results in accordance with GAAP--a standard measure for publicly traded companies.

CEO Elon Musk will preside over a call for financial analysts and media beginning at 5:30 pm Eastern today; we will update this article accordingly with any further information.

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Comments (33)
  1. Nice! I had a feeling they were teasing the shorts when they told people to expect a small loss for Q2. Of course it could still be a small loss by GAAP standards.
     
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  2. And some generally anti-EV publications like Automotive News took the bait and immediately questioned everything about Tesla Motors again... Some people never learn. No, Tesla Motors isn't invincible, but questioning it every single time there is even a trace of a problem...? Or even a rumor to that effect?

    To me, it's still really a loss, but that's okay since the reasons are acceptable to me. A tiny quarterly loss in these early days is not a concern if Tesla continues to make progress in other areas, which it surely is.
     
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  3. Hmm...

    SFGate reported that TSLA reported a loss. It is only a profit if "Excluding one-time items and lease accounting, Tesla says it had a profit of 20 cents per share."

    http://www.sfgate.com/business/article/Tesla-shares-jump-on-narrowed-2Q-loss-4715260.php
     
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  4. Exactly right, the lost money on net income and "used" money on cash flow from operations (meaning also negative), but if you throw away accounting rules than they posted a profit. The "one-time" items note is a red herring, it really goes from loss to profit if you exclude stock compensation and allow them to recognize revenue immediately, as opposed to deferring recognition of their lease sales over the 3-year life of the leases.

    The fact of the matter is that it was a loss, and a miss, but with the right spin the headline reads profit. Sales were also down from last quarter, when appropriately deferring revenue.
     
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  5. You know this all was done to appease underwriters an buddies on WS. The numbers were "ok" but full of gifts from the government (ie. CARB/ZEV) and lease accounting. Folks are getting rich based on positioning for this. Some will lose when they fall for the bull trap.
     
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  6. @John: Since we rarely get stock commentary in the comments: Do you have any positions in TSLA, long or short?
     
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  7. Just being picky, but even though Tesla's reports says they already sold 13,000 Model S cars, the actual number is 12,700: 2,650 in 2012, 4,900 in Q1 2013, and 5,150 units in Q2 2013. Inside EVs scorecard is consistent with the 12,700 figure. Did they add July sales to come up with 13,000 sales?
     
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  8. @Mario: I did the same math and came to the same conclusion. The wording was something like "now on the road," so they may have added July sales in to get there--a bit misleading, but the report is dated today, so it hangs together. Thanks for noting this, had meant to put that into the piece as well.
     
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  9. You're a voice of reason in the EV marketspace, John. Most folks are looking at Musk like the new messiah.
     
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  10. I have to say that I hope he is, but I am not worry free, I know that Tesla's cars will live on even if the company does not. I think and hope it will live though.
     
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  11. @John: Thank you for the kind words. I don't believe in messiahs. Any of 'em. People who believe in messiahs often are not susceptible to logic and science.
     
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  12. Tesla is on a chine paced line now. So eventually could make 300 cars in one day before lunch, once they can do 1 car a minute machine paced manufacturing on their advanced line in that advanced factory. There is a lot of room and so can easily have other lines for advanced options etc. Paint booths, cab finishing, etc.,etc. They can havee advanced options like aluminum air range extender for the frunk, AWD for the frunk, KERS power modules for the frunk and rear axle, etc. etc. Now they have an advanced electric it is at the beginning of its life cycle so who knows what people want. There are an infinite number of advancements and inventions.
     
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  13. 'Tesla is on a machine paced line, now' should have been there but was taken out.
     
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  14. Thanks, George! I was about to search for "chine paced"...

    But more importantly, you're right. Productivity will only improve and if Tesla gets the capital it should have going forward, even better things are in store.
     
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  15. 1 car per minute: 525960 per year

    I hope that happens, but it is a bit far away from now.

    On the range extender, no need for a range extender, no matter how it works. Tesla will never offer it because it is a dumb novelty item that has no real demand or use, it is only a selling point for those who have range anxiety. By the time any primary battery with the ludicrously cheap, high energy dense levels claimed of the "aluminum air" battery is available, there will be a Supercharger covering every inch of the contiguous USA anyway.
     
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  16. Are they still operating on long wait times from order to manufacture?
     
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  17. Last word I heard was a three month wait for the 60 kWh battery, two months for the 85 kWh battery and one month for the performance version. I waited two years so this is progress!
     
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  18. 1 month for the performance because they bring in the most cash!
     
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  19. 6-8 weeks for a "customized" car meaning you choose your options. Less time (meaning weeks to a month) for one they have in inventory.
     
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  20. Awe, where is the traditional zinger at the end of the article where Voelcker cautions us all that Tesla still has a long and difficult road ahead.

    Is Tesla's success starting to temper Voelcker's skepticism? Maybe he just didn't have room for it in the article :).

    But seriously, well done Tesla on every level.
     
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  21. I think John V. read the numbers in the 10-K release. There are some interesting things in there that day-traders are ignoring for now.
     
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  22. @John McV: Well, the company summary of the 10-K, but they tie together.

    @John B: Success is judged on many different aspects. Certainly Tesla to date has been more successful in building a truly first-rate car, one that has found a large niche that no one else filled, than many of us believed they would be.

    That said, the company faces many challenges: Keeping production profitable, expanding into global markets, refreshing their products, launching new products, and expanding to become a maker with volumes in the hundreds of thousands annually--not the tens of thousands. The magnitude of those challenges should never be underestimated.

    Better? :)
     
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  23. John Voelcker's early scepticism based on ancient ICE age wisdoms without even giving the company a chance to prove itself always seemed rather unwarranted. Having said that: I'm not exactly sure what warrants Tesla's current skyhigh market cap either. Tesla's numbers are certainly encouraging but the way I see it it will take a major battery breakthrough to live up to the sort of expectations it's current stock prices (which more than quadrupled this year)seem to reflect. If we accept those prices are actually a reflection of underlying economics rather than say speculation games and psychology of course.
     
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  24. @Chris O,

    That is one of the best comment on Tesla earning report in a long time. Certainly way better than anything that Wall Street has came out or the Tesla Fan club.
     
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  25. @Chris O: It's my job to be a skeptic from time to time. If you want breathless boosterism under all circumstances, you know there are plenty of sites that will provide that.

    And, indeed, a quadrupling of any company's stock price in one year is worthy of caution. But I'm not an investor, so that's worth exactly what you paid for it.
     
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  26. Glad to learn you are not an investor John. If you had put your money where your mouth was you would have lost a fortune by now betting against Elon Musk.
     
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  27. @Chris: It is inappropriate for any member of the automotive media to invest in any automaker. It creates the appearance of conflict of interest.
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  28. I hope they put the 40kW in the Blue Star…
     
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  29. Then that is NOT a 200 miles real world BEV...

    You would have to get 5 miles per KWh in order to barely reach that goal.
     
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  30. In fact, Telsa is planning for the 60KWh version in the Gen3 sedan.

    http://www.plugincars.com/tesla-aiming-double-model-s-production-127939.htm

    "Musk expressed a high degree of confidence in being able to produce a compelling 200-mile range Gen3 car in the $35,000 price range (before incentives). "
     
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  31. How is he going to do that when the battery alone will literally cost 30k? That may be possible with incentives, but not without. And just because he wants to sell a 200 mile version does not mean the company will not provide the 140 mile version, the one that is a better buy for most people and the one I would purchase.
     
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  32. The entire concept of Gen3 200 miles vehicle is based on the fact that Elon expect certain cost reduction in battery over the next 5 years.

    I believe the Tesla Battery cell cost can be as low as $300 per KWh based on how much a commodity 3Ah 18650 cell cost today (~ $3 each). Of course, that doesn't include the cost of packaging and cooling etc...

    I don't bet against Elon but I also think he is overly optimistic on his battery price reduction....
     
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  33. Also, at 40KWh, it will be lucky to get a real world 120 miles with heat usage. So, in order to do a real world 140 miles with unpredicable weather, a 140 miles real world EV would 46.6KWh or more. But you can't use 100% of the charge, so it is more like a 50KWh battery.


    At that point, from a platform sharing, it might be cheaper to install the same 60KWh from the Model S.
     
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