Tesla Posts Strong Q4 Earnings; Projects More Growth This Year

Tesla Motors’ fourth quarter and full-year 2013 financial news was received as overwhelmingly positive, with implications and projections for more growth ahead.

Disclosure that Tesla delivered a record 6,892 Model S sedans last quarter was not actually news, as that was revealed last month in Detroit, but it did put icing on the earnings cake.

Sales for the year amounted to 22,477 cars. This yielded $2.5 billion in sales on a non-GAAP basis or over $2 billion on a GAAP basis. The company also slightly exceeded its projection of 25 percent gross profit margin with 25.2 percent on a non-GAAP basis, or 25.8 percent on a GAAP basis.

“It is important to note that the differences between GAAP and non-GAAP are primarily due to lease accounting for our resale value guarantee (RVG) and employee stock based compensation as a result of the increase in our stock price last year,” said Tesla in its shareholder letter.

The company reported a net income of $46 million and beat Wall Street’s expectations by 10 cents with 33 cents earnings per share on a non-GAAP basis. On a GAAP basis, earnings per share was 13 cents, with a loss of $16 million.

Tesla’s TSLA stock today had closed down by 4.94 percent at $193.64. Presently at 8:30 Eastern time, after hours traders have bid it up to $218.09, up $25.45 per share, or 12.63 percent.

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Other news of significance is the Model X, delayed already in order to focus on international Model S roll out, will be delayed a bit longer beyond most-recently projected late 2014 first deliveries.

“We expect to have production design Model X prototypes on the road by end of year and begin volume deliveries to customers in the spring of 2015,” said Tesla in its shareholder letter.

During a conference call, Elon Musk called Model X demand “very high” despite “zero” marketing.

“If you’re going fishing,” he said, “it’s like the fish are jumping in the boat.”

As for the “Gen 3” mid-priced car Musk is looking at 2016-17 and this is dependent upon the pending “Giga” battery factory.

“Very shortly, we will be ready to share more information about the Tesla Gigafactory,” said Musk in the shareholder letter. “This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation. Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years.”

Model S assembly, Fremont. Calif.

Model S assembly, Fremont. Calif.

Other positive Model S news is it was named the highest-rated car for consumer satisfaction by Consumer Reports.

“Our efforts were validated in November by Consumer Reports’ owner satisfaction survey, which gave Model S a score of 99 out of 100, the highest satisfaction score of any car in the world,” wrote Tesla. “The next highest score was 95.”

As an extra perk for new Model S owners, effective Jan. 1, the company is providing free data connectivity and Internet radio for four years.

“To be fair to all, in rare cases a customer may be charged for extreme data use,” it said.

Expanding and Growing

But perhaps the bigger news is that the growth is projected to keep coming. The company is calling for an over 55 percent increase in 2014 Model S sales over 2013, or 35,000 units.

Tesla projects profits also to increase to 28 percent without counting potential ZEV credit sales.

Its expanding Supercharger network is credited in part for consumer acceptance.

What’s more, growth in Europe andf Asia are expected to be more significant.

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“Towards the end of the year, we expect sales in those regions combined to be almost twice that of North America,” said Tesla.

And on top of its new for global expansion is China where Tesla has priced the car the same as in the U.S. plus unavoidable taxes, customs duties and transport costs.

“The first Model S deliveries to China are scheduled for this spring,” said the company. “We plan to make substantial investments in China this year as we add new stores, service centers and a Supercharger network. Already, the Beijing store is our largest and most active retail location in the world.”

For more info on the past year’s results, and projections for the year ahead, you can read Tesla’s entire shareholder letter.

But beyond the near term past and future are potent declarations Tesla uses in describing itself in a unique moment in history.

Very telling is that it says it is not just competitive with traditional automakers, it suggests it is positioned ahead of traditionally entrenched automakers as it ushers in the “next technological era of the automotive industry.”

We believe that more than 100 years after the invention of the internal combustion engine, incumbent automobile manufacturers are at a crossroads and face significant industry-wide challenges. The reliance on the gasoline-powered internal combustion engine as the principal automobile powertrain technology has raised environmental concerns, created dependence among industrialized and developing nations on oil largely imported from foreign nations and exposed consumers to volatile fuel prices. In addition, we believe the legacy investments made by incumbent automobile manufacturers in manufacturing and technology related to the internal combustion engine have to date inhibited rapid innovation in alternative fuel powertrain technologies. We believe these challenges offer a historic opportunity for companies with innovative electric powertrain technologies and that are unencumbered with legacy investments in the internal combustion engine to lead the next technological era of the automotive industry.

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Tesla Motors uses proprietary technology, world-class design and state-of-the-art manufacturing processes to create a new generation of highway capable electric vehicles. We utilize an innovative distribution model based on Company-owned sales and service centers. This approach allows us to maintain the highest levels of customer experience and benefit from short customer feedback loops to ensure our customer needs are fulfilled. We believe our operational infrastructure provides us with a competitive advantage compared to traditional automobile manufacturers.