By on May 8, 2014

tesla-model-x

Although Tesla reported a profit of $17 million on $713 million in revenue, their financials were reported using non-GAAP (Generally Accepted Accounting Principles) figures. Which means that my current checking account, according to non-GAAP figures, is probably somewhere in the high seven figures.

Using GAAP numbers, Tesla lost nearly $49.8 million, on revenues of $620 million. Despite the loss, Tesla delivered 6,457 units, and expects to sell 35,000 Model S units this year. Tesla also announced that their Model X SUV will be delayed again, until 2015.

But the bad news was interrupted today by a major development for Tesla. Panasonic, a major supplier of battery cells to Tesla, signed a letter of intent regarding their new “Gigafactory” that will build lithium-ion batteries somewhere in the Southwestern United States.

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44 Comments on “Tesla Loses $49.8 Million In Q1 2014, Panasonic On Board With Gigafactory...”


  • avatar
    28-Cars-Later

    Tesla has earned its place in automotive history. Cadillac ELR, Nissan Leaf, and Chevy Volt will be footnotes (as Fisker already is). Even if Tesla becomes Tucker for the 21st century it will be remembered and cherished.

    • 0 avatar
      jdash1972

      As good as these electric cars are, there’s a limited market for what is essentially a rich persons toy. A person who can afford to drop 100k on something they don’t need and who will get rid of it when they get bored with it without regard to resale. A more economical model isn’t really going to change anything, they’ll steal sales from themselves. In my opinion the future is in hybrids, followed by better plug in hybrids. Hondas new hybrid Accord, the first really successful series electric drivetrain where the engine functions as a generator to drive an electric motor for full time operation (with a 1-gear direct drive “bypass” for highway speeds) is the way to go, and a monumental achievement. The plug in hybrid Accord is essentially the same thing, just with a bigger battery. If Tesla is going to grow out of being a manufacturer of toys for rich people, this might be the path to take, if they can. But gasoline engine tech is not their area of expertise so they may be stuck selling electric cars in a world without a great many chargers.

      • 0 avatar
        rolosrevenge

        It’s not a rich person’s toy, it’s a rich person’s car. In the past three years I haven’t made a single trip that couldn’t be done with a Model S. If I could afford one, it would be my only car. I can’t. I’m not rich. But it is a proper car, not a toy.

        • 0 avatar

          In the past three years I’ve made loads of trips that could not have been done with a Tesla, as well as more that would have been grossly inconvenient, but possible with a Tesla.

          If the range and charging time problems get solved, definitively, at prices average Americans can afford, this will be a great thing for the environment and for geopolitics. I’m just saying that with present technology, this is a niche vehicle.

          • 0 avatar
            Sigivald

            Yeah, I’m a lot more like you than rolosrevenge.

            Portland to Vancouver (BC) is as close to 300 miles as makes no difference.

            Which means “not possible” in the real world, without charging on the way.

            Either of my gasoline vehicles can make the trip not only without spending an hour fueling, but *without fueling at all*.

            The S is a beautiful, well made … niche car.

        • 0 avatar
          jpolicke

          We have family we visit that’s 180 miles away. We leave in the morning, top off near their home, and drive back that night. Easy. Impossible in a Tesla.

          • 0 avatar

            JPolicke.

            Impossible is a very absolute term. Inconvenient maybe, impossible? No.

            The shortfall for the round trip is 95 miles.

            With a Supercharger en route it would be easily accomplished with a 30 minute charge.

            If there were no superchargers en route, maybe there is a Nissan dealer or public chademo station en route? Tesla sell a Chademo adapter for the Model S. It would take about 45 minutes using this type of charging station.

            No chademo station en route? Now it gets a little more inconvenient. Level 2 charging station would provide the charge necessary in 3 hours.

            Too inconvenient? Run an extension to the relatives dryer outlet, pay them for the electric and do the same 3 hour charge. Inconvenient for sure. Impossible no.

            Two Frenchman went round the world in an EV with a 62 mile range. 360 miles is certainly not impossible.

      • 0 avatar

        The Hybrid Accord you describe sounds very much like the Chevy Volt. So its not the first successful example of this technology.

        LEAF sales are beginning to leave Volt sales behind as the market shifts its focus away from buying a car with two drive trains to one. Less expensive and less complex is finding favor with the consumers.

        Nissan have announced an extended range LEAF, I’m sure Tesla will do the same before long. The market is in flux and its too early to call pure electrics DOA.

        • 0 avatar
          Scoutdude

          Not it is not like the Volt at all. The Accord has a generator attached to the crank and a clutch on the other end of the generator that connects to a motor/generator that is in turn connected to the final drive. At low speeds it operates as a series hybrid and once the road speed is high enough it will often engage the clutch. However it can also operate in pure EV mode at the higher speeds depending on the power need and battery SOC.

          The Volt is much more complex with a transmission similar to that used in the Toyota and Ford Hybrids with some clutches thrown in. So the Volts transmission operates as a CVT when the ICE is the primary power source.

      • 0 avatar

        jDash. No shortage of places to charge your Tesla or any other EV.

        Understand EV’s differ to gas cars. The Supercharger is equivalent to gas stations, but is ONLY needed for extended trips. Day-to-day mileage is replenished while you sleep in the comfort of your home. There are therefore billions of places to charge, any outlet will do. The only limitation is on rapid charging, which isn’t needed very often.

        • 0 avatar
          jdash1972

          I think the Tesla is a cool car but it’s not really high tech, it’s old tech with better batteries and not the greatest thing since sliced bread. You and your 4500 lbs conveyance can commute in emission free silence, I’d love to have one. My point is that the power to charge those batteries still comes from a coal fired power plant burning 20 to 30 thousand tons of coal a day. Yes, we have windmills and hydro electric dams and nuclear power plants and solar cells and we’re fracking for natural gas all over the place but coal is still the name of the game for the most part. You’re just shifting the burden with an electric car. And just because a car is charged at an off peak time doesn’t mean it’s free, it just means you already have adequate generating capacity.

          • 0 avatar
            fozone

            It depends on where you live. Here in the PNW, the cars are selling like hotcakes, I literally cannot count the # I see commuting in and around Portland.

            Our Metro area is dense (even the far suburbs are easily doable in the Tesla), the climate is battery-friendly mild, and critically – we get a lot of our electricity from Hydro, so yes, the Tesla actually is helping the environment. At least in this region.

            I know dozens of people in this area who would sign on for a Leaf if they could just get the range up a bit — like to a safe 150 miles per charge. It just makes sense.

          • 0 avatar

            jdash1972

            Rebuttal to your coal argument here
            http://youtu.be/BQpX-9OyEr4

          • 0 avatar

            The Tesla is still significantly more efficient than an internal combustion car, so even with coal it pollutes less than a conventional vehicle.

            A lot of utilities have switched to natural gas, which is significantly cleaner than gasoline. As utilities switch towards greener energy sources, the Tesla will make more and more sense.

            It’s true that if you take long road trips, the Tesla is inconvenient. But for day trips, it is probably more convenient. For example, I drive down to Miami from West Palm Beach a few times a week. Total trip time is under 200 miles. This trip on the Tesla would cost $6 and would never require a visit to a gas station. The trip on an ICE car would cost $25 and I have to stop at a gas station a couple of times a week. The Tesla is not only much more convenient than the ICE car, it’s also significantly cheaper to run. Of course you will never make up the purchase price in savings, but it’s something well worth noting, as are significantly lower maintenance costs.

            Model S is definitely on my list once used ones get a bit less expensive …

            David

    • 0 avatar
      SCE to AUX

      @28-Cars:

      The Leaf is the best-selling EV in the world –> some footnote.

      IMO, the Volt isn’t a true EV, since it requires gasoline at some point.

      The ELR is a joke, and I can’t see it lasting into the 2016 model year, and maybe not even 2015. So I’ll give you that.

      Q1 sales:
      Model S = 6457
      Leaf = 5184
      Volt = 3606
      ELR = 180
      iMiEV = 28

      The EV market is really all about Tesla and Nissan, and for the moment they’re playing in different yards. By 2016, they’ll be in mortal combat for the same mid-range customers. As a happy Leaf driver, I eagerly await the compact Tesla (now possibly “Model Y”?).

  • avatar
    jpolicke

    Definitely a good deal for Panasonic. If Tesla goes under, they can step in and take over a fully operational plant making batteries for somebody else’s EVs, that was partly paid for with someone else’s money.

    Tesla needs a lower cost car to survive. When the $7500 tax credit goes away, or if other brands no longer need to pay as much for CAFE credits, they’ll be priced out of the market.

    • 0 avatar
      SCE to AUX

      No other EV uses the 18650 cell. Panasonic will simply be able to flood the laptop market with cheaper cells, except they’d all have to be shipped to China for assembly – not very economical.

      The $7500 tax credit is not as meaningful to a Model S buyer as it is to a Leaf buyer. Take it away, and you won’t really lose many Model S sales.

      Other brands will still struggle to meet CAFE if they build trucks.

      • 0 avatar
        Scoutdude

        The cost of manufacturing in China has gone up. It is now only about 5% cheaper for the actual manufacturing. When you add in the shipping and having to send your engineers over there to check on the production the quality issues ect and companies are in the midst of “re-shoring” the current hot word among manufacturing companies. As an example the latest Motorola phone costs about $1 more to make in Texas than it would have in China and because it is made in the US you can have your phone made to order laser engraved with your name in your own color combo.

  • avatar
    Big Al from Oz

    I do think Telsa cars are very nice and innovative…………but the link below is the reality of Telsa.

    http://www.forbes.com/sites/patrickmichaels/2013/05/27/if-tesla-would-stop-selling-cars-wed-all-save-some-money/

  • avatar
    RogerB34

    Nice car. Looks highly uncertain for Tesla even with tax subsidies.

  • avatar
    mars3941

    I’ll take a nice Lincoln MKZ Hybrid and put the extra 47 grand in my pocket. Thank you.

  • avatar
    baconator

    Well, if you want to see reality, look at the statement of cash flows. Tesla finished the quarter with $80M in cash less than they started. (To put this in perspective, GM’s cash hoard was $595M smaller at the end of March than it was on 1/1/14, so Tesla isn’t the only car company that knows how to spend money.)

    Tesla’s operating business brought in $60M, but they had to pay out $329M in debt service and also spent another $141M in capital expenses, meaning investment in future products and production capacity. So their car-making business is *making* money generally, but they’re investing heavily in the future. I’m not smart enough to say whether this will pay off, but it’s perfectly legitimate for management to invest in this way, and the capital markets are clearly supportive of their plans. Their stock price may be frothy, or not, but you have to respect what they have achieved.

    • 0 avatar
      Pch101

      Automakers need scale, and Tesla doesn’t have it. Selling more cars produces more costs that offset the revenue gains. With its low production numbers, that’s a problem that could be impossible to fix.

      What Tesla could use is a buyer that could provide some scale, such as an existing automaker. But the company is greatly overvalued, so there isn’t much reason for an old-school OEM to step up.

      • 0 avatar
        healthy skeptic

        >> Selling more cars produces more costs that offset the revenue gains.

        I’ve seen this before: that the automotive business is plagued by some sort of reverse economy of scale.

        How is that possible? Just askin’.

        • 0 avatar
          Pch101

          GM suffered from diseconomies of scale because the company became more inefficient as it grew larger.

          That isn’t Tesla’s problem. Tesla is too small to achieve scale.

          Its direct sales model is expensive, yet it can’t afford at this stage to get rid of it.

          The international expansion only adds to these costs, yet it needs to expand internationally if it is to have a hope of ever achieving scale.

          The R&D costs per vehicle are high because it doesn’t sell enough vehicles over which to amortize the costs. R&D is a killer in automotive because its costs several hundred million dollars to develop a platform; low volume without high prices turns this into a loser.

          At this stage, Tesla can sell cars at retail prices that are higher than the cost of the parts and labor that go into building them. But it can’t cover the rest of the overhead, which is inherent to the business of making and selling cars, plus adding those retail prices to the top line comes at the cost of high SG&A, which comes out of the bottom line.

          Aside from praying for a new owner, what Musk must be banking on is being saved by lower battery costs in the future, which might make it possible to sell a lower-priced model with some gross profit in it and add some scale. We’ll see how that goes.

          • 0 avatar
            Dr. Kenneth Noisewater

            Yet.

            TSLA closed a very successful bond offering for $2B at a crazy conversion price and 25bps lower than analysts expected. This was also increased by 0.5B from the initial offer due to demand.

            Tesla has delivered on its promises in a timely fashion to date, let’s see if management continues to do so.

          • 0 avatar
            Pch101

            Tesla keeps pushing back its launch schedule for its upcoming models, and its R&D spending in past quarters would suggest that they weren’t spending enough to stay on schedule. (Under US GAAP, R&D is booked as an operating expense, which reduces profits or increases losses, so Tesla is highly motivated to play with this number.)

          • 0 avatar
            SCE to AUX

            “what Musk must be banking on is being saved by lower battery costs in the future”

            I think that’s it. The battery comprises a hefty portion of COGS for their cars (probably 50%), so reductions in these costs achieved by recycling materials at a Gigafactory could really help improve margins and offer a competitive compact car. Lots of ifs, however.

  • avatar
    NN

    Despite all the expert analysis that illustrates the long shot, a bet on Tesla is ultimately a best on Elon Musk. This is not a regular business. We’ve had only a handful of people as visionary in the business world; Howard Hughes, Steve Jobs, Bill Gates, (maybe) Jeff Bezos. I personally think Musk is, if not the top, on his way to the top of that impressive list (not just for Tesla, but Paypal, Space X also). This is a highly desirable product, powered by lots of PR, vision, and tremendous, tremendous execution. In the long term, I wouldn’t bet against Tesla, or Mr. Musk, at all.

  • avatar
    GoFaster58

    If Tesla/Panasonic should choose to build their super duper battery plant anywhere in the central Texas area will they also build the roads to carry the increased traffic? Our roads can barely breathe as it is. I’m so glad Toyota chose Plano, TX to move their headquarters.

  • avatar
    brianyates

    jdash1972, you may be surprised to know that contrary to what you say about”Tesla stuck selling electric cars in a world without many chargers” there are in fact a great many chargers in place right now and the way Tesla are rapidly doing things there will be many more to come. At this time it is possible to drive a Tesla from L.A. to New York with adequate chargers available, also from L.A. to Vancouver, B.C.

    • 0 avatar
      cmoibenlepro

      It’s not like I’d do a trip from NY to LA anyway with a gas car…

    • 0 avatar
      Sigivald

      And charging with a SuperCharger is still a half-hour process, not a five-minute process.

      Not convincing, yet, even on The Freeway – and as far as I understand it for that LA-NY run you can’t just pick *any old route* and still have SuperChargers.

      It’s still a niche vehicle.

      Nothing *wrong* with that, either.

      • 0 avatar
        fozone

        I don’t know a single person who can afford a Tesla that would even consider driving from LA-NY — in any car, ever. It just isn’t a typical use case.

  • avatar
    Master Baiter

    Companies with a complete product line can afford to have EVs as loss leaders. Tesla can’t.

  • avatar
    kosmo

    Am I missing the point of this article?

    Isn’t reporting financial results in non-GAAP format a HUGE deal with the SEC?

    Or can Tesla just put an asterisk at the bottom of the spreadsheet stating “Oh, by the way, we do our figuring different from every other company, because, well, we’re special, and everybody loves us”?

    Musk is a savvy guy. I suspect he has an exit strategy where within the next 3-5 years, he will be acquired by a Fortune 500 company. If not, Tesla will ultimately implode financially, as the market moves on to the next Cinderella Story.

    • 0 avatar
      Pch101

      The SEC filings (10K, 10Q) use GAAP.

      But Tesla also issues “shareholder letters” (or whatever they’re called) a bit ahead of the 10Q and 10K, and those include the non-GAAP numbers. This gets the media and fans all abuzz about Tesla’s claims of “profit,” and nobody ends up paying attention to the SEC filings when they come out a few days later. Musk really knows how to work the media.

  • avatar
    jdash1972

    I neither want Tesla to succeed nor fail. I like the idea of electric cars and sophisticated and improving battery technology. I just don’t think electric cars make a whole lot of sense with the world the way it is. I agree it’s a niche vehicle. And I believe it’s an extravagant expenditure that will be dumped by the owner when the paint no longer shines or the fashion changes. This company makes exactly one product, and it’s trendy at the moment, but that will change. Lithium ion batteries last about 10 years, give or take, if you take care of them. Hopefully the price (not the cost) of those batteries will drop, but the drop will have to be significant and that hasn’t happened yet. After 100k miles and 10 years, I wouldn’t want to be holding the bag, and which one of you would? This car is likely to find itself in a scrap yard long before it’s time and that is neither efficient, economical or “green”.

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