Tesla posts second-quarter loss, misses expectations
Tesla Motors Inc. lost hundreds of millions of dollars in the second quarter and badly missed tepid Wall Street expectations. But CEO Elon Musk painted a rosy picture of a future that includes profitability, fully self-driving cars and a factory that resembles “an alien dreadnought.”
The California-based electric carmaker on Wednesday posted a second-quarter loss of $150 million due to fewer-than-expected deliveries of its Model S sedan and Model X SUV. Tesla’s $1.06 loss per share on $1.56 billion in sales was more than double Wall Street expectations of a 52 cents per share loss on $1.62 billion in sales, according to Yahoo Finance.
But executives remain optimistic that the automaker can still turn a profit for the first time by the end of the year.
“We’re clearly disappointed with our delivery numbers, but there are some underlying stories we feel really good about,” Jason Wheeler, Tesla’s chief financial officer, said on a conference call. “If we can execute on our production and delivery goals in the second half of the year, we have a great chance to be (profitable).”
The automaker has struggled with meeting its own goals, which happened again in the second quarter.
Tesla said it produced 18,345 vehicles — a quarterly record — but it missed delivery targets because most of the production occurred in the last four weeks of the quarter.
The company delivered 14,402 new vehicles in the three-month stretch that ended in June, including 9,764 Model S sedans and 4,638 Model X SUVs. Musk said the company was on pace to “support deliveries of approximately 50,000 new Model S and Model X vehicles during the second half of 2016.”
Musk is preparing the team to launch the highly anticipated Model 3 by July 2017. The car was revealed earlier this year to much fanfare, and Tesla has 373,000 reservations for the car.
During the quarter, Tesla invested $295 million in capital expenditures to increase production capacity, accelerate Gigafactory construction, and expand customer support infrastructure. Musk said Tesla expects to invest about $2.25 billion in capital expenditures in 2016 to support its accelerated production plan for the Model 3.
Following the Model 3 launch, Musk said Tesla’s “obvious priority” will be a compact SUV he called the Model Y, followed by fully self-driving cars.
“What we’ve got will blow people’s minds,” he said.
Analysts remain unamused.
“Tesla’s loss that was twice what analysts expected on production volume, that was lower than anticipated, illustrates that the auto business is hard and it is expensive,” Michelle Krebs, Autotrader.com senior analyst, said in a statement. “One wonders if the activity around acquiring Solar City caused Tesla to lose focus on its first business — making cars.”
Combining Tesla and SolarCity is part of a new master plan for the company that Musk released last month that included focusing the combined companies into a cohesive company that delivers SolarCity solar panels, Tesla Powerwall energy storage units and Tesla electric vehicle charging stations. He reiterated those intentions earlier this week as a way to help solve “the sustainable energy problem.”
“Several key aspects of Musk’s business plan, including a merger with SolarCity and the launch of the Model 3, will occur over the next 12-24 months,” Karl Brauer, KBB senior analyst said in a statement. “Until those events happen, and we’re given a solid idea of how each impacts the company, the quarterly numbers will remain largely academic.”
Musk on Wednesday took a broad view of the company, saying its growth is “unprecedented in the modern era.”
“It’s really nutty,” he said. “In 2010 we were making 600 cars a year, and Lotus was doing the body and chassis.”
Part of Musk’s vision is redefining the manufacturing process — what he calls “the machine that makes the machine.”
He likened the Tesla factory of the future to an extraterrestrial warship.
“At the point which the factory looks like the alien dreadnought, then you know you’ve won,” Musk said. “It might look like a super high-speed bottle canning plant. You really can’t have people in the production line itself, otherwise you automatically drop to people speed. There’s still a lot of people at the factory, but there’s maintaining the machines, upgrading them, dealing with anomalies, but in the production process itself, there will essentially be no people.”
Tesla released its earnings after the stock market closed Wednesday. Its stock closed down 0.6 percent to $225.79 a share.