Tesla reports increased sales, delays Model X again

Tesla Motors reported a $75-million loss, about double that of a year ago, and announced another delay for its highly anticipated Model X sport utility vehicle.

But other numbers in the earnings report on Wednesday spoke to continuing growth at the maker of high-end electric cars. The company reported third-quarter revenue of $852 million, nearly double the figure from a year earlier and up slightly from the $769 million it reported in the second quarter.

Telsa, led by Chief Executive Elon Musk, maintained its high-flying status on Wall Street, seeing a jump in its stock price in after-hours trading. Tesla stock closed down 3.3% at $230.97, but rose above $243 in after-market trading.

Revenue for the quarter included $93 million from the sale of regulatory credits, including zero-emission vehicle credits awarded by California and other states. Automakers need the credits to comply with environmental regulations.

The company also reported $31 million in powertrain sales, mostly from Daimler, which uses the powertrains in some Mercedes-Benz B Class vehicles.

The company reported third-quarter deliveries of 7,785 of its Model S vehicles, which have a base price of about $71,000 but can sell for more than $100,000 with options. The company said these numbers were a little lower than anticipated, due to changes at factories that are being retooled to build the Model X.

Despite that, Tesla said, the company expects to nearly hit its target of 35,000 vehicles built in 2014. The company said it will end the year having produced something closer to 33,000 vehicles, about 50% above its delivery numbers for 2013.

Tesla said it is still on track to be building cars at the rate of 2,000 units a week by the end of 2015, for an annualized rate of 100,000 cars a year. Musk told analysts he was certain the company could increase production by 50% each year for the next several years.

Those numbers gave some analysts doubts about Tesla’s performance over the long term.

“Tesla is at 35,000 and wants to get to 500,000 by 2020,” said Kelley Blue Book senior analyst Karl Brauer. “Tesla’s current stock value assumes the company will hit that number, but the reality of Tesla getting there is difficult to imagine.”

Moreover, Brauer and others said, revenue from the sale of ZEV credits to competing automakers may not be a dependable, long-term revenue stream. Those automakers will earn more credits on their own as
they produce more zero-emissions vehicles themselves.

“To depend on that as a component of your total revenue numbers is dangerous,” Brauer said.

A prickly Musk, responding to questions during an analysts’ conference call, insisted that the lower production numbers did not reflect declining consumer appetite for the Model S.

“It’s not a question of demand,” Musk said repeatedly, adding that orders for the luxury electric vehicle continue to rise in the absence of much encouragement from their manufacturer.

The orders for the Model S are being placed “with no advertising, and no endorsements,” Musk said.

“We don’t pay anyone to say they like our product,” he said. “There’s a bunch of things we could do to stimulate demand. That is not our problem.”

Tesla’s reported loss of $75 million amounts to 60 cents a share. That compares to $38.5 million, or 32 cents, in the same quarter a year earlier.

But on an operating basis, the automaker reported a small profit of $3.2 million, down from $16 million in the same period a year earlier. Those figures allow Tesla to count deferred revenue from a special car sales program that’s similar to a lease, and excludes certain interest and compensation expenses.

Cash on hand, the company said, decreased by $304 million to $2.4 billion, due in part to a 28% rise in research and development expenses on the company’s Model X, its planned “autopilot” autonomous driving features for future cars, and its development of the all-wheel “dual motor” drive system to be offered on a new Model S variant.

But Tesla fans will have to wait a bit longer for the Model X sport utility, which is expected to use technology similar to the Model S sedan and sell for a similar price tag. In the latest of many delays, the company said it now expects Model X deliveries to start in the third quarter of 2015.

If the Model X does ship in the third quarter, it will be arriving almost a year after it was originally predicted to be available.

And, Musk added, a customer ordering a Model X today could not reasonably expect to receive the vehicle until 2016.

“We’re essentially sold out for 2015,” Musk told analysts.

In a statement to shareholders, Tesla cast the delay as a sign of its devotion to quality: “We prefer to forgo revenue, rather than bring a product to market that
does not delight customers.”

Twitter: @misterfleming