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Tesla posts $30.5 million Q2 LOSS – stock RISES over 12% and tops $151/share!

After a turning a first-ever profit early this year on sales of its electric cars, Tesla Motors of Palo Alto, California, posted a $30.5 million LOSS in its second quarter. But guess what…! The analysts were EXPECTING the loss, which amounted to 26 cents/share, because of Tesla’s new leasing program! In after-hours trading, Tesla stock climbed over 12% to top $151/ahare!

SFGate.com says:

“It’s all about the long-term story,” said Andrea James, research analyst with the Dougherty & Co. investment bank, before Tesla released its results. “People want to see good delivery figures, good gross margin progression. That’s really what you’re going to look for in this quarter.”

Deliveries of Tesla’s Model S luxury sedan rose to 5,150 during the quarter, passing the company’s forecast of 4,500 cars. Since the Model S hit the market in June 2012, Tesla has shipped 13,000 to North American customers. Deliveries to Europe started this week, with the first cars headed to Norway, Switzerland and the Netherlands.

Annualized sales, expected to reach 21,000 this year, could surpass 40,000 by late 2014, according to the company. Tesla’s Fremont factory now cranks out nearly 500 vehicles per week, up from 400 per week in the first quarter.

Over 30% of Tesla’s customers who received their cars in the second quarter took advantage of Tesla’s new financial program which resembles, but is not the same as, a lease. Customers can get a Model S for 10% down, and then, after three years, have the option of selling the car back to Tesla. SFGate.com continues:

The number of Tesla leases could rise. Alec Gutierrez, senior analyst at Kelley Blue Book, said many luxury car makers lease 40 to 60 percent of their vehicles.

“As they try to be competitive with traditional luxury brands, it’s critical for Tesla to have something like a lease,” he said, before the earnings report.

But under generally accepted accounting principles, Tesla must spread the revenue for leased cars over three years rather than booking it up front. Minus the effect of leases, and stripping out one-time items, Tesla would have made a $26.3 million profit for the quarter (20 cents per share).

In contrast, the company lost $105.6 million ($1) during the second quarter of 2012, under generally accepted accounting principles.

In the second quarter of this year, Tesla also realized less revenue from “zero emission vehicle credits” than it did in the first quarter. Under the air pollution rules in California, a given percentage of the cars that automakers sell in the state must emit little or no tailpipe exhaust. If a company MISSES the quota, it can buy credits from other automakers, such as Tesla.The credits earned Tesla $68 million in the first quarter, but only $51 million in the second quarter.

In stark contrast to the situation in California, dealers in other states have tried to shut out Tesla (which sells directly to customers rather than through franchise auto dealers) by asking state legislators to adjust existing laws that protect franchises!

Tesla CEO Elon Musk said he was focused on ramping up production, during a conference call with Wall Street analysts today. According to SFGate.com:

And he repeated his intention to build a smaller, mass-produced car that will be affordable to the middle class, a car the company refers to as “Gen 3.” Base prices for the Model S range from $69,900 to $94,900, locking out many would-be buyers.

“I have high confidence we can create a compelling car for around $35,000,” Musk said.

Work on the Model X, Tesla’s next car, will become the company’s top priority by the end of this year. The Model X is a crossover designed to compete with luxury SUVs. Production will start in 2014 with delivery of a few units by the end of the year.

-Bill at

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