By on August 8, 2013


Defying analysts’ predictions that Tesla Motors would report a quarterly loss of $0.17 a share, the EV startup instead announced that it had a second quarter profit, after adjustments, of 20 cents a share, according to non-GAAP principles. On the news, Tesla stock went up 13% in after hours trading.

When using GAAP principles, Tesla posted a net loss of $30.5 million for the quarter. Revenue related to car sales dropped from the first quarter by over $150 million to $401 million, reflecting deferred revenue on financed vehicles. Last year for the second quarter Tesla posted revenue of $26.7 million and a $105.6 million loss.

On a non-GAAP basis, Tesla said second-quarter net income totaled $26 million, excluding special items and $100 million in gross profit with a gross profit margin of 22 percent. That gross profit does not include a lot of overhead items like r&d, and sales and administrative costs. With those factored in, Tesla said it had an operating loss of $12 million for the quarter.

Part of the company’s bottom line has to do with the sale of zero emissions credits to other car companies. In the 2nd quarter, Tesla sold $51 million worth of ZEV credits and an additional $18 million in “other regulatory credits.” The company said that it ended the first half of fiscal 2013 with $746 million in cash on hand, up from $214 million at the end of the first quarter and $210 million a year ago. Tesla also rolled its lease accounting into this quarter’s results, something not allowed under GAAP. That helped Tesla arrive at the profit that they’ve been touting.

Net income was up 70% from the first quarter to $26 million, on 5,150 deliveries to customers, in line with Tesla’s earlier announced 20K/yr production rate on the Model S. The company says that it increased production in the quarter by 20% to 500 Model S cars, so actually current production is closer to 25,000 annual units.

Tesla said that it will open “several more” dealerships in the next year, one of them being their first store in China. It’s not clear if that dealership will be factory owned or not. Export markets are currently a focus of activity at Tesla. Deliveries of the Model S to Europe began this week. If needed as they expand into new markets, Tesla says that production could exceed 40,000 cars by the end of next year. Tesla CEO Elon Musk said that the company getting Asian variants of the Model S ready, a right hand drive version for Japan and a Chinese model with an “executive back seat” instead of the “family back seat” used in other markets. Those cars will be on sale by the end of 2014

Tesla shares, which closed at $134.23 on Wednesday, went above $150 in after-hours trading following the news.

In other product news, Musk said that the next Tesla, a mass market sedan to be priced at $35,000 (without government subsidies), will have a 200 mile range. He also said that the company will be working with its suppliers as it ramps up production. “You can’t give people a car that’s 99 percent complete,” Musk said. “Some suppliers are not set up for volume production. We’re striving to become demand-limited, rather than production-limited.”

You can view the financial results (PDF) that included a Q&A session with Musk here.


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34 Comments on “Tesla Surprises Analysts With Second Quarterly Profit – Depending How You Do The Math...”

  • avatar
    Mark MacInnis

    Elon Musk is either a certified genius, or a complete nutjob. His success ‘inventing’ PayPal and Spacex support the former, but his tilting-at-windmills, rebel-without-a-pause take on the automobile industry suggest the latter.

    If he can pull off a RELIABLE 200-mile range PEV for $35K, I’m in.

    • 0 avatar

      I won’t bet against it.

      Current entries in that category already sell at that price. In 4-5 yrs, they will be even cheaper. So Tesla should have room to price a similar car with that range.

    • 0 avatar

      Given the dry parade of execs running auto companies these days (Sergio and Carl excepted), I’ll take Mr. Musk.

      The takeaway for me is that Tesla’s financial position is improving via good product management and working the (ridiculous, IMO) carbon credit system. Instead of clear losses, now they’re hovering around break-even since it depends on how you do the math. Someday soon, the math won’t matter so much.

    • 0 avatar

      He’s both. He’s the least risk averse tycoon I’ve ever heard of.

      I get the feeling that he’s trying to gamble his fortune away, but smart enough to stack the deck first… And his win-rate is pretty good.

      Suits me fine, especially if he builds me a car I want to buy..,,!

    • 0 avatar

      He ‘invented’ PayPal like Marconi ‘invented’ radio – he had zero to do with the invention – he was just a name with some cheesy marketing who fooled some fools.

      Use the shiny box in front of you and this novel thing called a ‘search engine’. You’ll learn that Musk was just a guy who happened to be in the right place at the right time, was summarily fired, but got an incredibly valuable stock package during his short tender. He did none of the original work, even a wiki article will explain it all.

      Furthermore, learn how to math. The investors are at about 1/100th of recovering their cash, and if you learn anything about the costs of producing vehicles, you’ll see this is a complete scam on the order of ‘better place’. That it’s made it this long, is much akin to letting GM get $100B in the hole…

      Just remember, I told ya. Just like GM, just like ‘bricklin chery’, just like ‘better place’. It’s an Enron-level scam and only complete idiots fall for it.

      • 0 avatar

        Musk didn’t invent the electric car, either.

        He just got the right engineers together with the right resources to build one that people are lining up to pay $80k for, and selling them profitably (at least on a EBITDA basis).

        Speaking as someone who’s spent a career in the engineeringy-branch of academia and the computer industry, that actually does take a genius. The engineers and factory workers who did the work deserve the lion’s share of the credit, but bad management can easily destroy the best efforts of the best engineers and the hardest workers.

        Lots of companies have tried and failed to crack this nut, and Nissan and Tesla are the only ones that have really figured it out. What separates them from, say, GM or any of the other EV startups that have tried over the years?

        Same story with SpaceX.

        • 0 avatar

          As one who has seen the final P/L side of it all, I know that Musk is merely the latest in a series of flim-flam jokers. His 10Q’s prove his joke company is doing nothing but burning cash – that they state a tiny profit means zippo if you have ever run a business.

          Just because he fooled the idiots, does not make him a genius….

          EBITDAA? That was used as a con-man’s metric from Boston Chicken through Enron – it means far less than jack squat. (If ‘jack squat’ translates as ‘I’m blatantly stealing from idiot investors’)…

          SpaceX is a different cat altogether, as one can simply raise the price and the gov will pay it – hardly a meaningful demonstration of acumen. Read the contracts before you comment.

          • 0 avatar

            Do you even know what EBITDA means? I’m guessing that you missed what I actually said; I guess that’s my fault for using jargon on a general audience board.

            It means that they’re making money by operating the business, but not necessarily making enough money to pay off the debts they’ve incurred to build the factory and develop the product.

            That’s better than anyone else has done, and it’s a significant milestone. But, They’ll have to do much better in order to keep going over the long term. Still, it’s enough to keep the company making cars for a good while.

          • 0 avatar

            I’m eminently familiar with EBITDA(A), et tu?

            Earnings Before Interest Depreciation Amortization (and Annualizeds). Got it? I did, 20 years ago when it was how my employer pumped the chumps.

            Once again he’s done sweet FA that Fisker didn’t do much better, save for conning people to keep throwing cash into his furnace. He STILL has a massive burn rate, and if you aren’t one of his accolytes, everyone one Silicon Valley (let alone Sand Hill) knows he’s a POS con-man.

            He’s far less substantive than P.T. Barnum.


  • avatar

    The number to compare to the analyst estimates appears to be 5 cents a share of profit, vs estimates calling for a loss in the 17-20 cents a share range. That’s Tesla’s “operating profit” — earnings before interest and taxes and things that most accountants will consider special items, which is the basis most analysts use for estimates. So yeah, they “beat estimates”, but Elon Musk has been around Silly Con Valley long enough to be an old hand at that game.

  • avatar

    Isn’t the next Tesla going to be the Model X?

    • 0 avatar

      Correct. The $35k “mass market sedan” is not their next model, it will be the one after the Model X, and will probably arrive around 2017.

      • 0 avatar

        Because Tesla will be there in 2017.


        • 0 avatar

          That’s what people said about Tesla in 2013, in 2009.

          If you wanted to be on a horse in this race, it would be hard to do better.

          I imagine that you’re happy with your Porsche and, therefore, wouldn’t feel the need bet on a horse in this race.

          I’m more interested in new technology than speed, though, so I’m interested in EVs. Of course, with a Tesla Model S, you don’t have to choose between new tech and speed — but $80k is a lot to pay for a car.

          • 0 avatar

            I’ve long ago bet on electrics, and they have sweet FA to do with Musk’s lies, let alone his smoke-n-mirrors. Didja know anything about the sales of the ‘Tesla’? How he couldn’t even figure out a transmission for a car he just jammed some batteries in? Yeah,didn’t think so…

            Musk knows nothing that my dog didn’t excrete on his morning walk. He just fools chumps who know nothing about the field.

          • 0 avatar

            You must be referring to the 2-speed transmission that was planned for the Tesla Roadster that was eventually replaced by a simpler reduction gear, while still producing car that met the goals of the project?

            And you’re using THAT to render a verdict on the Model S and the viability of their business?

            There are a lot of reasons that I personally won’t be owning a Tesla Roadster, but that is not one of them.

          • 0 avatar

            That car ‘met the goals of the project’? Seriously? Who gives a eff? Did it make money? No, it lost millions.

            The delivered was 20 miles from the promised, with a 20% premium tacked on to the early depositors and their “guaranteed price”.

            Do you even know what he actually “accomplished”? He jammed a battery pack and an electric motor into someone else’s scratch-built chassis. BFD. Coupled with a lot of pathetic self-indulgent hype.

            Regardless, I know cars, business, and the car business. He’s light years away from basic profits, let alone ones large enough to actually sustain the business on positive cash flow basis.

            He’s a hustler just like Agassi, Bricklin and a dozen others.

  • avatar

    I like Tesla in theory, and have enjoyed driving the cars (living in Denver seems to be the 2nd home of the company outside of southern california) but I couldn’t help but notice that Barclays downgraded them this morning.

    Seems they feel that the stock may be valued higher than it is actually worth now. I wonder why…

    • 0 avatar

      as a result Tesla shares are up over $150. NHTSA 5 star rating news should filter to the masses soon to.
      I would say the downgrade is a good thing in a calming sort of way.

    • 0 avatar

      Here I thought Greater Boston was the second home of Tesla. Lots of ’em around here, including a surprising amount of Roadsters.

      • 0 avatar

        Dozens of well to do Wellesley and Weston housewives driving the Model S around my area. They might be buying these over the Range Rovers.

        • 0 avatar

          We have plenty of Teslas in Andover as well. You’re right about the Range Rovers. Last year I passed a school bus stop not far from my house and for a minute thought there was some sort of Range Rover club rally – until I realized they were just there waiting for the school bus. I’ll have to do another survey this fall to see how many Teslas are at the stops.

          • 0 avatar

            I even saw one in the college town where I live. Parked at a community garden, no less.

            I think I saw the same one a few days later on a road outside of town.

            Given the way things work in my town, I’m betting that it replaced a Prius, in a home occupied by two senior (in every sense of the word) faculty members.

            You don’t see many Range Rovers or BMWs here, both for financial and cultural reasons.

  • avatar

    The maths gives me a headache. I would say overseas markets are the way to go from here though. The Model S is well suited to the European market where range is less of an issue and environmental concepts more readily acceptable.
    An American car the Europeans will like!

  • avatar

    Any one else pick up on the NHTSA ratings for the Model S? Full 5 stars…

  • avatar

    I have to wonder if the upcoming “mass market” car is going to hurt sales of the Model S. Some of the market for EVs is just for any EV. Having two choices from Tesla may reduce sales of the S. When that happens, average unit revenue will fall. Could be a problem.

    • 0 avatar

      I would expect that if there are people buying an EV just to have an EV, they are getting a Leaf. It certainly could cannibalize some of the Model Ss sales, but I suspect the pool of potential buyers is so much larger that the net benefit will be positive.

  • avatar

    If the car moves as well as the stock I wouldn’t mind trying one.
    I saw a roadster recently and was really taken with its appearance.
    Too bad they have made the roofline so low on the S. I suspect they are placing the good customer’s ass on the floorpan, the same as everyone else. I hate paypal, so I don’t know why I am so intrigued with this car mfg. I guess just because the stock is so compelling.

  • avatar

    Here in Santa Monica, I would say the Prius is the most common model of car in West LA. Prius owners, regardless of income, tend to drive them to advertise green-cred while still having a reliable, actually useful car. Those folks have one upgrade path up the social and performance ladder: A Model S. I see about four or five Model S’s a day, compared to three or four just a couple months ago. Everybody I know with money enough to afford one, likes them. Like Apple Tesla has products that appeal to that succulent demographic of the trendy who actually have money. There is a deceptively large market for these automobiles,.

    The technology in the Model S, and I am surprised by this much as anyone, seems to work generally within what is advertised. And Tesla has accomplished something that seems in retrospect pretty hard: Their batteries don’t catch on fire or blow up. Boeing failed at that, Chevy failed at that, Fisker failed at that among many, many things.

    Tesla I think has a chance to be the alternate-automotive Amazon; such to say they get a burgeoning new market all to themselves, executing right compared to incompetent competitors, with constantly rising revenue, customers, and expectations – yet make very little to no money, and for years remain perpetually overvalued.

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