Tesla Motors Inc. (TSLA) rose after the carmaker led by Elon Musk reported second-quarter results that beat analysts’ estimates and set a goal to double its pace of electric-vehicle production by the end of 2015.
Excluding some costs, earnings were 11 cents a share in the quarter, the Palo Alto, California-based company said yesterday in a statement on its website. The average estimate compiled by Bloomberg was 4 cents. Tesla plans to be able to build 100,000 vehicles annually by the end of next year.
“It appears Tesla’s run-rate of production and deliveries is at least one, if not two full quarters ahead of our expectations before the quarter,” Adam Jonas, a Morgan Stanley equity analyst, said in a research report today. He rates the stock the equivalent of a buy. Jonas said Tesla’s output goal for the end of next year is almost 25 percent above his firm’s estimate for 2016.
Tesla, which also said yesterday that it broke ground in Nevada for a planned battery factory while continuing to evaluate other sites, still plans to deliver more than 35,000 cars this year. Chief Executive Officer Musk said in May that tight supplies of lithium-ion batteries would hold quarterly deliveries of Tesla’s flagship Model S, priced from $71,000 in the U.S., to 7,500 units.
Quarterly unit sales for the youngest publicly held U.S. carmaker rose to a best-ever 7,579 as it began deliveries to China. That matched the average of nine analysts’ estimates compiled by Bloomberg.
“It is such a volatile stock, so the reaction can be hard to predict,” said Efraim Levy, an analyst for S&P Capital IQ, who rates Tesla a hold. He predicted the company would report a profit of 7 cents a share, adjusted from generally accepted accounting principles, and a gross margin of 25.7 percent in the quarter, on a non-GAAP basis.
Tesla said its non-GAAP automotive margin was 26.8 percent. On a GAAP basis, it was 26.9 percent, the company said.
“With Tesla you want to see sequential growth in deliveries and a steady increase in capacity,” Levy said. “You want to see progress in China as it’s one of their venues of growth.”
Tesla’s net loss widened to $61.9 million, or 5 cents a share, exceeding an estimate of $41.2 million. Sales were $769.3 million, excluding $88.2 million in deferred revenue for leased vehicles, the company said. Adjusted for the lease accounting, revenue beat analysts’ estimates by 5.5 percent.
A year earlier, adjusted earnings were 20 cents a share.
The company now plans $750 million to $950 million this year in capital spending and research and development, an increase of $100 million from the previous forecast range.
Deliveries this quarter should rise to 7,800 units, Tesla said yesterday. That suggests the company must get at least 13,000 cars to customers in the year’s final quarter to meet its 35,000-unit goal for 2014.
Preparation at a site near Reno, Nevada, for the proposed plant that Tesla calls a Gigafactory, intended to be the world’s largest producer of lithium-ion cells, began in June, the company said.
“We’ve essentially completed the creating of the construction pad for the Gigafactory in Nevada,” Musk said yesterday on a conference call. “We are going to be doing something similar in one or two other states, something I previously said we were going to do.”
Earlier yesterday, Panasonic Corp. (6752) said it would invest an undisclosed amount in the Nevada plant, which Musk wants to open by 2017 and eventually will employ as many as 6,500 people.
Musk, 43, reiterated on the call that the plant will require as much as $5 billion to build.
“Of that number, we see Tesla probably providing 40 to 50 percent of the total; Panasonic probably about 30 to 40 percent; the state maybe 10 percent; and other industrial partners maybe 10 to 15 percent, depending on how vertical we go with the factory,” he said.
That suggests Panasonic’s investment would rise to as much as $2 billion.
The factory is to achieve cost reductions through large-scale assembly and vertical integration of all aspects of production, Musk said.
“Processed ore from mines will enter by railcar on one side and finished battery packs will exit on the other,” Musk and Chief Financial Officer Deepak Ahuja said in a letter to shareholders.
Tesla’s goal is for the plant to produce batteries that are 30 percent cheaper than those the company now uses. The new batteries will power a more mass-market electric car, the Model 3, that’s due by 2017.
The factory would also make stationary batteries to let homes and businesses store power from solar panels.