Tesla delivered ~5,500 Model S worldwide in Q3, more than 1,000 to European customers; non-GAAP profit narrows and GAAP loss widens from Q2
In its third quarter results, Tesla Motors reported delivering about 5,500 Model S units worldwide, with more than 1,000 of those going to European customers. On a total unit basis, that exceeded the second quarter’s 5,150 models which went to the North America market. (Earlier post.)
CEO Elon Musk said that Tesla is continuing to expand production and plans to deliver slightly less than 6,000 Model S vehicles in Q4, which would increase total expected deliveries to 21,500 vehicles worldwide for 2013. The company is now producing 550 cars per week.
GAAP and non-GAAP reporting. Tesla introduced its lease-sale hybrid financing product for the Model S through one of the company’s specified banking partners at the beginning of Q2. Although the company receives full payment for these cars upfront, GAAP requires treating the sales as leases and spreading the recognition of revenue and cost over the term covered by the resale value guarantee—approximately three years. GAAP reporting thus obviously can have a significant impact on Tesla’s reporting, given the hybrid leasing/sale model.
Tesla prefers to present non-GAAP financials excluding the effect of lease accounting by adding back all deferred revenues and related costs for Model S deliveries, as well as standard GAAP financials.
Q3 results. Q3 revenues were $603 million on a non-GAAP (Generally Accepted Accounting Principles) basis up 9% from Q2, while GAAP revenues were $431 million, up 6% from Q2, despite a drop in ZEV credit revenue in California. One of the drivers for the anticipated drop in ZEV credit revenue to $10 million in Q3 from $51 million in the prior quarter was the shift in the mix of sales to Europe and non-ZEV states in the United States, Tesla said.
Non-GAAP automotive gross margin (excluding zero emission vehicle or ZEV credits) rose to 21% from 14% last quarter. Musk said that Model S gross margin may continue to make slight improvements over the next several quarters as Tesla continues to drive down manufacturing costs. They company expects to achieve its target of 25% non-GAAP automotive gross margin in Q4 (assuming no contribution from ZEV credits).
Excluding ZEV revenue, non-GAAP revenues grew 18% from Q2. The strong revenue growth was driven by an increase in vehicle deliveries and higher vehicle average selling prices (ASPs) due to the start of European deliveries and a higher mix of cars with 85 kWh battery packs. Tesla also continues to supply full electric powertrains to Toyota for the RAV4 EV.
Overall, Q3 non-GAAP gross margin was 22%, and 24% on a GAAP basis. Q3 non-GAAP net income was $16 million, or $0.12 per share. This excludes lease accounting, stock-based compensation and non-cash interest expense. Including these items, GAAP net loss was $38 million or $(0.32) per share.
In Q2, non-GAAP net income was $26 million or $0.20 per share, while GAAP net loss for the quarter was $31 million or $(0.26) per share.
In trading after the announcement, Tesla stock dropped about 11%.
Superchargers. In its quarterly letter to shareholders, Tesla noted that Supercharging (Tesla’s very fast charging system) has become a significant part of the Tesla value proposition; 90% of customers opt for supercharging capability when they order their Model S. Nearly a third of all Model S cars have been supercharged at least once.
Tesla has 31 stations open in North America today, and expects to have by year-end a network that will allow cross country driving in the United States and a higher concentration of stations along the east coast.
Tesla is expanding the Supercharging network into Scandinavia and Europe. In August, Tesla opened a network of six Supercharger stations in Norway. After Norway, the company is putting specific emphasis on Germany where we plan to upgrade to even faster 135 kW Superchargers. By March 2014, Tesla plans that more than half of Germany should be covered, with complete coverage by mid-2014.
By the end of 2014, Tesla expects that the entire population of the Netherlands, Switzerland, Belgium, Austria, Denmark and Luxembourg and about 90% of the population in England, Wales and Sweden will live within 320 km (199 miles) of a Supercharger station.
Relative BEV sales position in US. Tesla doesn’t release monthly sales numbers, preferring to make quarterly announcements, nor it is now breaking out US-specific sales as its global sales footprint widens. However, rounding to the nearest hundred, if we take 5,500 Q3 sales globally, and 1,000 in Europe, that yields approximately 4,500 sales for North America spread over 3 months, or about 1,500 units per month.
Assuming all of those go into the US, that would place Tesla second behind the Nissan LEAFs very strong Q3 performance: 6,237 units over the three months (1,864; 2,420; and 1,953 for July, August and September, respectively), or an average 2,079 units per month.
Other battery-electric vehicle models are one or two orders of magnitude behind those two leaders, with the RAV4 EV averaging 169 units per month over Q3; Ford Focus Electric, 145 units; smart fortwo, 126; Chevy Spark, 94; Honda Fit EV, 55; and the Fiat 500e, 50 (after two months).