Tesla Q2 sales beat forecasts

Although Tesla Q2 sales beat forecasts, its earnings, revenue and profit did not. The company sold 7,579 Model S electric sedans in Q2 compared to 5,150 in Q2 2013. The all-electric carmaker says it expects to meet its target of 35,000 vehicles sold in 2014. A deal has been reached with Panasonic to build a huge battery plant in the US.

Tesla Motors Inc. made a loss of $62 million or 50 cents per share on revenue of $768.4 million.

After publishing its Q2 earnings, Tesla’s share price dropped 2.55% to $217.60 in after-hours trading. Since the beginning of 2014, its stock price had gained over 48%.

In a letter to shareholders, Elon Musk, Chairman and CEO of Tesla Motors Inc., wrote:

“We have had an active first half of 2014, and the rest of the year is expected to be even busier. The development of our large-scale battery manufacturing facility, known as the Tesla Gigafactory, is proceeding well. We have formalized our agreement with Panasonic for cell manufacturing at the Gigafactory and remain on track with the site selection process.”

“In addition, we are adding new production capacity to our Fremont factory that will allow us to meet the growing worldwide demand for our vehicles.”

Mr. Musk believes the company should produce more than 100,000 units by the end of 2014.

Tesla Q2 2014 Financial Results

(Data source: Tesla Motors Inc.)

Gigafactory agreement with Panasonic

On Thursday, Tesla and Panasonic announced they have reached an agreement to build a large battery plant in the US.

According to the deal, Tesla will provide the land, buildings and utilities, as well as preparing and managing the construction of the factory, while Panasonic will produce and supply cylindrical lithium-ion cells and invest in the related equipment, machinery and other manufacturing tools.

Telsa will then take the cells and other components and assemble the battery modules and packs. Tesla will carry on buying battery cells produced at Panasonic’s factories based in Japan in order to meet expected demand for cells.

Co-founder and Chief Technical Office of Tesla Motors, J. B. Straubel, said:

“The Gigafactory represents a fundamental change in the way large scale battery production can be realized. Not only does the Gigafactory enable capacity needed for the Model 3, but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications.”

Executive Vice President of Panasonic, Yoshihiko Yamada, added:

“We have already engaged in various collaborative projects with Tesla toward the popularization of electric vehicles. Panasonic’s lithium-ion battery cells combine the required features for electric vehicles such as high capacity, durability and cost performance. And I believe that once we are able to manufacture lithium-ion battery cells at the Gigafactory, we will be able to accelerate the expansion of the electric vehicle market.”

The Gigafactory will produce cells, modules and packs for the electric vehicles produced by Tesla, as well as for the stationary storage market. It is expected to produce 35GWh of cells and 50GWh of packs annually by the end of this decade. By 2020, it will employ about 6,500 workers.

Tesla cars

Tesla Motors, based in Palo Alto, California, designs, manufactures and sells all-electric cars and electric vehicle powertrain components. (Photo: Tesla)

Third quarter and 2014 outlook

Tesla expects to produce approximately 9,000 vehicles in the third quarter. The forecast would have been 11,000, but there will be a 2-week production shutdown when the transition to the new final assembly line at the Fremont plant occurs.

The company forecasts that 7,800 Model S vehicles will be delivered in Q3.

Operating expenses in the third quarter are expected to increase by about 20% for research and development and 15% for Selling, General and Administrative Expenses (SG&A).

On a non-GAAP bases, Tesla expects to be “marginally profitable” in Q3. “Based on our current stock price, we project between 141 and 143 in diluted shares outstanding in Q3,” Mr. Musk said.

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