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Tesla Q3 revenue up 10% year-on-year, losses widen; robust production outlook

Tesla Motors reported total GAAP revenue of $937 million in Q3 2015, up 10% from the prior year. Total Q3 non-GAAP revenue was $1.24 billion for the quarter, up nearly 33% from a year ago. Losses for the quarter widened to $230 million, an increase over the $75-million loss in Q3 2014.

Tesla delivered 11,603 vehicles in Q3, slightly above its earlier guidance. GAAP automotive revenue in Q3 was $853 million, up 6.7%. For its non-GAAP accounting, Tesla recorded a net increase of $307 million in deferred revenue as a result of lease accounting, bringing the figure the company calculates as its non-GAAP automotive revenue to $1.16 billion.

Leasing was more popular in North America during Q3, but the percentage of Tesla direct leasing declined as its leasing partner absorbed more than the sequential increase in leases. Tesla directly leased 494 cars to customers in Q3, worth $45 million of aggregate transaction value.

Highlights of the report include:

  • In Q3, global Model S orders increased by more than 50% from a year ago, and grew at a faster pace in North America, Europe and Asia, than during Q2.

  • Tesla exceeded its production plan by producing 13,091 vehicles, including the first Model X vehicles, despite a one-week shut down to expand manufacturing capacity.

  • Research and development expenses declined from Q2 levels to $179 million to as Model X development work diminished during the quarter. R&D spending remained above Q3 2014.

  • In Q4, Tesla plans to build 15,000 to 17,000 vehicles, and to deliver 17,000 to 19,000 vehicles, which will result in 50,000 to 52,000 total deliveries for the year.

  • Model S production and deliveries are on track to achieve our initial Q4 plan. The primary limiting factor to higher Q4 deliveries is the near term ramp of Model X production, with the biggest constraint being the supply of components related to the second row monopost seats.

  • Tesla expects that Model X will achieve steady state production capacity during Q1, and held to its forecast of average production and deliveries of 1,600 to 1,800 vehicles per week for Model S and Model X combined during 2016.

  • Tesla expects the average vehicle sales price to increase slightly in Q4 with more deliveries of highly optioned Model X vehicles. It also expects Q4 Model S gross margin to improve sequentially, but initial Model X launch expenses and higher overhead and depreciation allocations will temporarily elevate total production costs in Q4.

  • Tesla forecasts a decline in non-GAAP Automotive gross margin from Q3. After Model X production stabilizes in Q1 2016, it expects Model X gross margin to improve rapidly and become comparable to Model S gross margin over the next several quarters, even given the launch of a lower priced version of Model X with a smaller battery pack during 2016.

  • Tesla plans to invest about $500 million in Q4, which will bring the projected total capital expenditures for this year to about $1.7 billion. The increase in spending is primarily due to accelerated investments in the Gigafactory, further vertical integration of seat assembly and other manufacturing activities, as well as faster milestone execution by certain suppliers for Model X manufacturing equipment and tooling.

Tesla customers logged almost 250 million miles in Q3, for a total of nearly 1.5 billion miles to date.

Gigafactory. Tesla began production of Tesla Energy products in Q3 at the Fremont plant. Faced with growing demand for Powerpacks and Powerwalls, the company accelerated plans to expand manufacturing capacity. In early Q4, it relocated production from Fremont to an automated assembly line at the Gigafactory. The Gigafactory pull-ahead will push some Tesla Energy Q4 production and deliveries into Q1.

Tesla said it was seeing very strong demand for Tesla Energy products globally, and particularly in Australia, Germany and South Africa. The company has accelerated plans to begin cell production for Tesla Energy products at the Gigafactory by the end of 2016, several quarters ahead of initial plan.

Tesla recently signed two conditional purchase orders for lithium hydroxide in order to promote sourcing of this commodity at lower cost and with reduced environmental impact. It plans on establishing further supplier arrangements with the intent of having a robust, flexible and cost effective supply chain in place.

New CFO and sales chief. Tesla also announced that Jason Wheeler will be Tesla’s next Chief Financial Officer and that Jon McNeill has joined as President of Global Sales and Service.

Wheeler joins Tesla after 13 years at Google Inc. where he was Vice President of Finance and led Google’s global finance function. Wheeler will replace Deepak Ahuja, who announced his intention to retire from Tesla earlier this year.

Jon McNeill is the former CEO of Enservio. Before Enservio, Jon co-founded Sterling Collision Centers. At Sterling, Jon’s team reduced industry repair times by 90% (from 18 days to less than 2 days) while simultaneously growing the business at more than 40% per year.



Another 1,500 cars have been produced and apparently did not arrive anywhere.
That is around 10,000 cars which apparently have disappeared into thin air since the start of Model S production.
That is a heck of a demonstrator fleet.

Losses of $20,000 per car is also not the way traditional stick in the mud car companies operate.

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The good news for Tesla this quarter is that they have begun production and sales of two new key products; 1) the Model X and 2) the energy packs. Before it was only the Model S and some niche production for Benz and Toyota. It is going to be very interesting to follow the ramp up in production and sales of Model X and those energy packs for Q4 and Q1.

I also note that "In Q4, Tesla plans to build 15,000 to 17,000 vehicles, and to deliver 17,000 to 19,000 vehicles..." Normally in a growth company production is higher than deliveries. Tesla did not offer an explanation in their letter to shareholders but I guess it is a result of Tesla's new European assembling factory that just reduced European delivery times to less than 2 months down from less than 4 months. Tesla no longer need to send fully made vehicles by ship to Europe. Instead they ship vehicle components that are subsequently assembled in Europe according to customer order specifications. That will eliminate a lot of vehicles in transit to customers.

I also note that Tesla bought their supplier for the second row seat manufacturer for Model X. This acquisition of a Tesla supplier follow another acquisition last year of a Boston based supplier of stamping tools for Tesla's plate manufacturing lines. We also know that Tesla is making that Giga factory bringing in-house battery cell manufacturing. I have not seen any other automaker being so vertically integrated as Tesla and it seems that Tesla continues to increase this integration percentage. I guess Tesla's intention is to reduce costs and also reduce supply uncertainties. The risk is that it makes the production at Tesla very complex for just one company. Of cause with purely battery electric cars all the complexity of combustion engines, multispeed transmission and exhaust systems are eliminated. That makes it easier to do more vertical integration in other areas without ending up with a company that is too complex to manage efficiently.

Finally, I note Tesla's last word to their shareholders "Our customers drove their cars almost 250 million miles this quarter, for a total of nearly 1.5 billion miles to date. We are looking forward to the day when we can tell you how far our cars have driven our customers, and to the introduction of many more innovative products manufactured and sold globally."

So obviously Tesla is super focused on making a fully autonomous BEV. IMO this is the most important objective that Tesla have. If they can crack that problem a year or two ahead of the competition they will not be demand constrained for another 10 to 15 years. There is nearly endless growth and profit opportunities in autonomous BEV taxi services. It could easily become a 4000 billion USD market globally (for all such taxi service providers).

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Davemart there is noting traditional about Tesla. GM, Toyota and VW does not need to invest what it takes to grow production capacity by over 50% per year. As long as Tesla can maintain a healthy 20% or better gross margin on their production there is noting material to worry about. Your envy and disgust for Tesla and Tesla's customers is pathetic and small minded.

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I wrote Boston based supplier above. That is wrong I ment Michigan.



The joke is we are losing money, but we will make it up in volume.


They are investing in the future. I guess people don't understand that you have to spend money to make money.
Put your money under the bed mattress or bury it in the back yard - nice and safe and useless.


They are also buying back older Model S cars and reselling them as Certified Pre-owned. Easy way to make money and up the number of cars sold.


Quarter after quater with more revenues and less profits is a great way to go bankrupt?

TESLA will soon have to find investors with a few more $$B or find ways to generate real profits to stay in business.

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Tesla has to grow fast and get to 200 k units per years or they will not be able to compete on price they day the older and much larger auto makers are also making 200k BEVs per year. In other words, the sure way for Tesla to fail as a company will be not to grow its sales but to focus on profit making for shareholders on say 50 k Model S per year.

Tesla's ambition is 5 to 10 million cars per year like Toyota, GM and VW. Until Tesla reach that capacity with production in every part of the world they will be loosing money and growing fast. Tesla will not have a problem attracting new capital from issuing new stocks as long as they can deliver a gross margin of 20% or more and also grow much faster than the global market. So far Tesla has zero problem selling new stock to cover their losses which will continue for many years to come possibly 10 more years. A vey loose guees is that Tesla need to invest 2 billion in prop, plant and equip for every 100k production capacity per year they get. So to make 5 million cars per year Tesla need to invest 100 billion USD of which they can self finance about 75 billion USD over healthy gross margins. The rest will be financial losses that will be financed by issuing new stock and debt.

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