Electric-car maker Tesla Motors Inc. (TSLA) may have slipped back into the red last quarter, reversing its first-ever profit in the prior period, after a lease-style financing program cut into revenue.
The company, led by Chief Executive Officer Elon Musk, may report a loss of 20 cents a share excluding some items, the average of 10 analysts surveyed by Bloomberg. Palo Alto, California-based Tesla is projected to report $387.9 million in revenue, the average of 10 estimates, after generating $561.8 million in sales in the first quarter.
Tesla has said sales of U.S. and California green-car credits to other automakers, which helped first-quarter profit, would decline. Leasing and expansion into Europe also damped second-quarter results. Tesla shares soared after it posted first-quarter net income of $11.2 million, which was also aided by a one-time benefit from accelerating a U.S. loan repayment.
“These kinds of issues are more signs of Tesla becoming a real car company, not an experiment,” said Karl Brauer, an analyst for Kelley Blue Book, an industry pricing and data provider in Irvine, California.
Tesla began in April a lease-style finance offer that may have limited Model S revenue recorded for the quarter, said Elaine Kwei, an analyst for Jefferies Group, who who rates the shares a buy. Initial shipments to Europe, for final assembly in the Netherlands, won’t be recorded as revenue until the year’s second half, she said.
Decade-old Tesla is an auto-industry phenomenon this year. Its shares have surged more than fourfold, fueled by the first-quarter profit, a rave Model S review by Consumer Reports magazine and the rushed repayment of the Energy Department loan that got the company’s factory into operation.
Tesla had $85 million of revenue from selling both California zero-emission vehicle credits and U.S. corporate average fuel economy-related credits for the three months that ended March 31, according to a May regulatory filing. Tesla’s California credit sales to other automakers will drop in each successive quarter this year, Musk said in May.
California and nine states that follow its Zero-Emission Vehicle program require carmakers to generate compliance credits by selling models that emit little or no tailpipe exhaust, including plug-in hybrids, battery-only cars and hydrogen vehicles. Large manufacturers need the most credits to comply and Tesla, with annual volume too small to be covered by the rules, generates surplus credits.
Perhaps most significant will be how many units of Model S the company forecasts to deliver this year, said Ben Kallo, a San Francisco-based analyst with Robert W. Baird & Co. who rates Tesla shares outperform.
“More than the bottom line, I think people are going to be focused on deliveries and margin improvement,” Kallo said. He estimates the company may deliver as many as 22,000 cars this year. Kwei expects at least 21,500 deliveries of the Model S, priced from $69,900 before a $7,500 U.S. tax credit.
Tesla fell 5.7 percent to $134.06 at 10:28 a.m. New York time. The shares rose 320 percent this year through Aug. 6.
Musk, who is also Tesla’s biggest shareholder, declined to discuss any change in the annual sales target in a July 10 interview at the carmaker’s Fremont, California, plant.
Production of Model S began in June 2012, and the company missed an initial 5,000-car sales goal last year. In the first quarter, Tesla struggled to reach a production pace of 400 cars a week.
That output level has since been surpassed, and “not trivially,” Musk said last month. “At this point, making 400 cars a week actually feels like a walk in the park, whereas it was a nightmare in Q4.”
A development this year that wasn’t foreseen for Tesla was the degree to which Model S would become a particularly trendy car in California and other markets, said Brauer.
“Right now the Tesla Model S is the new Prius -- the cool car to have for rich people for what it represents, the statement it makes,” he said. “Back in 2004, Prius became the trendy green car for celebrities. Now it’s Model S.”
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