EV maker Tesla Motors reported Q3 revenues of $50 million, an 88% increase from the prior quarter, reflecting ramping deliveries of the Model S, continued sales of the remaining Roadsters internationally, and an increase in powertrain component sales to Toyota for the RAV4 EV. The company produced 350 and delivered 253 Model S units in the quarter as well as 68 Roadsters. Progress on the full electric powertrain for the Mercedes Benz EV continues on schedule.
Non-GAAP net loss for the quarter was $97 million, or $(0.92) per share, and GAAP net loss was $111 million, or $(1.05) per share, based on 105.6 million weighted common shares outstanding. Gross margin for Q3 was negative 17%, in line with earlier guidance, primarily because the cost of automotive sales reflects the full burden of operating the Tesla factory allocated over a limited number of vehicles produced, along with launch-related variable cost inefficiencies, the company said.
Tesla is maintaining its 2012 revenue guidance of $400–$440 million, including the expectation of approximately 2,500–3,000 Model S deliveries to customers in Q4.
Production rate has grown from 5 cars per week at the beginning of the quarter to 100 cars per week by the end. That rate has doubled since last month and is now at more than 200 cars per week or 10,000 cars per year—the critical threshold needed for Tesla to generate positive operating cash flow, the company said. Tesla to double production again within a month and achieve the target rate of 400 cars per week or 20,000 per year.
Despite many short term costs associated with the ramp, Tesla nonetheless expects to get approximately halfway to the 25% gross margin target by end of year.
Other highlights of the quarterly report included:
Research and development (R&D) expenses were $55 million on a non-GAAP basis and $62 million on a GAAP basis. The 19% sequential decrease in non-GAAP R&D expenses was primarily due to the shift of manufacturing expenses from R&D into cost of revenues as the Tesla Factory became fully operational.
Selling, general and administrative (SG&A) expenses were $32 million on a non-GAAP basis and $38 million on a GAAP basis. A modest increase in expenses for the expansion of our store network and service infrastructure was partially offset by a decline in general and administrative expenses.
Capital expenditures were about $69 million in Q3, as the company continued to build out the Tesla Factory and made final tooling payments to suppliers of Model S components. Most of the remaining tooling payments are expected to be made in Q4 based on our supplier terms.
Tesla concluded the quarter with total cash of $109 million. This includes short term restricted cash, primarily to prefund the first DOE loan payment due in December 2012. Just after quarter end, it raised $222 million in net proceeds in a follow-on offering. This brought total available cash to $330 million heading into Q4.
Tesla completed its draw down of the $465 million DoE loan facility in Q3. In October, it pre-funded its second loan payment, related to principal and interest due in March of next year.
For the fourth quarter, Tesla expects:
Achieving positive free cash flow (cash flow from operations, inclusive of capital expenditures) in spite of short term cost inefficiencies.
An improvement in automotive sales gross margin due to higher volumes and planned cost reductions. Tesla reaffirmed its gross margin target of 25% in 2013 upon achieving the manufacturing efficiencies and planned cost reductions associated with its objective of 20,000 deliveries in 2013.
R&D spending to be flat in Q4, as it continues with further vehicle development, including introduction of smaller battery packs, and homologation for EU and Asian markets.