Autos Take Center Stage Back From Batteries in Tesla Earnings

A Tesla S P85D plugged in at a charging station in Nephi, Utah.

Photographer: George Frey/Bloomberg

Cars -- not batteries -- will take center stage as Tesla Motors Inc. reports earnings later today.

Tesla investors will scour the results for clues on whether the company’s on track to meet this year’s ambitious goal to sell 55,000 vehicles and for progress on its Model X sport utility vehicle, due to be released this summer.

Analysts surveyed by Bloomberg estimate that Palo Alto, California-based Tesla will lose 49 cents a share excluding certain items even as quarterly sales exceed $1 billion for the first time. The company last month said it sold 10,030 Model S luxury electric sedans in the quarter, so investors will be looking for a second-quarter forecast and how it feeds into the full-year outlook.

“Investors are braced for a loss,” Brian Johnson of Barclays said in an interview. “What’s the second-quarter delivery guidance, and do they say anything about the Model X and the 55,000-unit guidance for the year?”

While Chief Executive Officer Elon Musk generated excitement last week for the Tesla Energy line of stationary battery products for homes, businesses and utilities, that unit can’t blossom until Tesla’s massive battery factory begins production next year. So for now, investors want to know if sales are picking up in China and whether the Model X SUV is still going into production this summer.

The crossover, intended to appeal to women as well as men, has been delayed twice. Investors and customers alike are eager for production and deliveries to begin. The new model is also important to helping Tesla reach its full-year sales goal of 55,000 -- a 74 percent increase from 2014’s total.

‘No More Delays’

“Can Tesla hit the 55,000-unit guidance for this year? That’s the biggest linchpin for the stock,” Dan Galves, an analyst with Credit Suisse, who has an outperform rating and $290 price target, said in an interview. “It’s also extremely important that there are no more delays in the X.”

Shown as a gull-wing concept in 2012, it was originally to go on sale last year. In February 2014, Tesla said mass deliveries would begin in early 2015, then last November, Musk said buyers would start taking possession in the third quarter - - “a few months later than previously expected.”

For the second quarter, the average analyst estimate is for 12,025 Model S deliveries. Tesla had forecast about 22,000 first-half deliveries, including 1,400 vehicles that would’ve gotten to customers last year if not for holiday delays and winter weather.

In its February letter to shareholders, Tesla said it will reorganize the revenue and cost of revenue subsections of its income statements in 2015. Auto revenue will include sales of new cars and regulatory credits, while “Services and Other” includes powertrain sales to partners like Daimler AG, trade-in sales and stationary storage sales.

Tesla sold $66 million in California zero-emission vehicle credits, known as ZEV credits, during the fourth quarter.

Used Cars

The company quietly began its certified pre-owned program to sell used Model S sedans on its website April 24. Every pre-owned Model S comes with a 4-year, 50,000-mile limited warranty. In the San Francisco Bay area, the used Model S vehicles listed on the website are all vehicles without dual motor, the popular all-wheel-drive “D” option that was introduced last fall.

Also on investors’ minds are signs of progress in China. While sales have been slow in the world’s largest auto market, Dan Dolev, an analyst with Jefferies LLC, said a proprietary survey shows enough demand to meet Tesla’s sales goals through 2020 just in North America and western Europe.

“Concerns about China sales are overblown,” Dolev said in a note to clients Tuesday. Jefferies initiated coverage with a buy rating and $350 price target.