Tesla Motors' second-quarter numbers are out, and depending on how you figure profit, the electric automaker either made $26.2 million or lost $30.5 million. Also, Elon Musk regrets ever mentioning the Hyperloop.
First, let's talk profit. Tesla's net income for Q2 was $26 million, an increase of 70 percent from Q1. However, that's not using the Generally Accepted Accounting Principles (GAAP) math -- or non-GAAP. If you apply GAAP, Tesla lost over $30 million. How?
Tesla included its lease accounting into this quarter's results, something that's not approved by GAAP. Slate explains that Tesla "rolled out an innovative loan/purchase/buyback scheme that lets people basically lease the cars but with Tesla getting all the money up front via a financing arrangement with Wells Fargo or US Bank." Essentially, Tesla got all the cash for the expensive Model S sedans it sold and rolled that into this quarter's income. That's not allowed under GAAP, hence the discrepancy.
Even Deepak Ahuja, Tesla's CFO, admitted early on in the earnings call that, "this is a confusing quarter."
Overall revenue also took a slight hit due to the reduction in zero emission vehicle credits (ZEV) that Tesla sells to other automakers. Tesla reports it's boosted output from 400 vehicles per week to 500 in an attempt to account for the reduction in ZEV credits. It also deserves noting that the automaker has announced plans to purchase a 31-acre parcel next to its Fremont factory for expansion, so expect that to put a hurt on profits in the future.
So, math out of the way, how is Tesla doing? In a word: well.
So, math out of the way, how is Tesla doing? In a word: well.The automaker delivered 5,150 Model S sedans during the quarter, but only expected to get 4,500 into customer hands. That brings the total number of all-electric cars running around the U.S. to over 13,000, and demand is growing, particularly outside the state of California where you can't swing a dead iPhone without hitting a Model S.
Tesla estimates total Model S sales could exceed 40,000 by late 2014, but co-founder and CEO Elon Musk was unabashedly irritated by the lack of output from Tesla's suppliers. "It's pointless to push volume when you don't have the production to meet it," Musk said during the call. It's obvious that Tesla's suppliers didn't take the automaker seriously and now they're trying to churn out as much as they can while keeping quality up to the level Tesla demands.
Additionally, the automaker delivered its first European Model S this week, is working on a right-hand drive version for other markets, and is busting hump to develop a Model S for China. According to Musk, that model will have "an executive back seat" for a country that prefers to be driven rather than drive.
Tesla has also made some changes to the options list on the Model S, finally breaking out the delectable performance package goodies for lesser models, adding a new sub-zero weather package, upgraded leather interior, new wheel options (for both performance and efficiency) and a teak-style center console for the floor. Slick.
Musk also talked about the forthcoming launch of the Model X, which is starting to move up on Tesla's priority level. The "Falcon-wing" SUV based on the Model S is due to arrive in late 2014. There was also discussion of the "third-generation", high volume model that's due out in a few years. Musk says that Tesla is intent on delivering an all-electric sedan that's sized around a BMW 3 Series, has a range of 200 miles, and costs $35,000 -- not including any federal or state rebates. Ambitious. And what about competition from BMW in the form of the newly announced i3? "There's room to improve on the i3," says Musk. "And I hope they do."
Finally, on the upcoming Hyperloop announcement on Monday, Musk had this to say, "I think I shot myself in the foot by ever mentioning the Hyperloop."
However, he re-confirmed his commitment to publishing detailed designs of the yet-to-be-seen high-speed people mover next week, but is content to sit on the sidelines and let others work out the dirty bits.
"[The Hyperloop] can just be out there as an open source design that people can keep improving," Musk said. "I don't have any time to focus on it as I have to focus on Space X and Tesla."
