Tesla Motors expected to post wider quarterly loss amid Model X delays

Ellie Shin of Santa Monica is photographed inside theTesla Model S by Monica Chloe of La Crescenta inside that Tesla Motors showroom at Santa Monica's Third Street Promenade.
(Jay L. Clendenin / Los Angeles Times)

Tesla Motors Inc. is a proven standout at generating hype for cars it plans to build.

But the electric-car maker’s current production will be the focus of Tesla’s first-quarter financial results, due to be announced after the stock market closes Wednesday.

UPDATE: Tesla Motors posts a bigger loss, and two key executives plan to leave

The Palo Alto company is expected to post a much larger quarterly loss than it did a year earlier, in good part because of delays in building its new Model X sport utility vehicle.


Tesla has said most of those problems have been fixed and Model X production has accelerated. The company’s other vehicle is its mainstay Model S sedan. Both vehicles cost $70,000 or more.

Tesla’s quarterly results will come out one month after the ballyhooed unveiling of its Model 3, a mass-market sedan that’s scheduled to arrive in late 2017 with a base price of $35,000.

As the unveiling approached, thousands of would-be buyers lined up outside Tesla dealerships to deposit $1,000 and reserve the four-door Model 3 even before they saw what it looked like.

Tesla Chief Executive Elon Musk said a month ago that those reservations exceeded 325,000, and he is likely to provide an updated number Wednesday.

At the same time, Tesla is expected to report another quarterly loss using both standard “generally accepted accounting rules” and on a non-GAAP basis, which factors out costs such as employee stock-based compensation.

Tesla is forecast to report an adjusted non-GAAP loss of 60 cents a share, compared with a loss of 36 cents a share a year earlier, according to analysts surveyed by FactSet Research Systems Inc.

Tesla’s first-quarter sales are forecast to jump 45%, to $1.6 billion from $1.1 billion.

In February, when the company last reported its quarterly results, Tesla posted an adjusted loss of 87 cents a share, much larger than analysts had expected.

But analysts also see Tesla turning profitable on an adjusted basis starting in this year’s second quarter, according to FactSet.

A key factor behind the fourth-quarter loss was delays in shipments of the Model X, which Tesla blamed on shortages of a few parts and its own “hubris in adding far too much new technology” to the SUV, which is known for its stylish falcon-wing doors and race-car like acceleration.

The Model X problems also resulted in Tesla’s overall first-quarter deliveries of 14,820 vehicles (12,420 Model S cars and 2,400 Model X vehicles) falling well short of expectations.

Tesla said it resolved the Model X problems and that Model X shipments “improved dramatically” to 750 vehicles per week by late-March, which would equal roughly 9,000 to 10,000 a quarter.

As a result, Tesla said it remained on track to deliver 80,000 to 90,000 new vehicles overall this year.

But analysts will be listening closely to Musk on Wednesday for reassurance about that production schedule.

Efraim Levy, an analyst with S&P Global Market Intelligence, said the Model X snags are one reason “I’ve become less confident of their achieving objectives that they’ve set out.”

Analyst Colin Rusch of Oppenheimer & Co. said in a note to clients Monday that “investors will be looking for [second-quarter] shipment guidance to reflect some amount of acceleration to support” Tesla’s full-year production forecast.

They’ll also be listening for anything Tesla says about whether the Model 3 launch has affected orders for the Model S, Rusch wrote.

The outlook is crucial to investors because Tesla’s volatile stock is so richly priced.

When Tesla reported its 2015 results Feb. 10, its shares had slumped to $143.67. But the stock then soared more than 80% in the following weeks — it reached $265.42 on April 6 — amid the buzz surrounding the Model 3.

The stock has since pulled back, and it closed Tuesday at $232.32, down $9.48, or 3.9%. That still gives Tesla a market valuation of nearly $32 billion.

Twitter: @PeltzLATimes

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