Tesla Hits a Speed Bump


Despite the tepid economic recovery, car makers have reported higher sales, especially for electric vehicles and hybrids. Recently, General Motors (NYS: GM) saw its revenues increase more than 100% as production got back on track after the Japanese crisis and also as demand for its hybrid, the Cruze, surged.

And then there's Tesla (NAS: TSLA) , which doubled its second-quarter revenues but saw its losses increase on higher research-and-development costs. Those higher losses sent shareholders to the selling table, and the stock closed off 9%.

A look at the numbers
Revenues for the quarter more than doubled to $58.2 million from $28.4 million last year, up a staggering 105% as the Roadster enjoyed increased demand around the world. The model fetched $27 million in the last quarter with 190 units delivered.

However, Tesla's costs shot up to $74.8 million from $37.6 million, an increase of 105% from last year. The company spent more on R&D and hiring this quarter as it works on developing a number of new vehicles.

Those higher R&D expenses resulted in an increased loss of $58.9 million and a larger operating loss of $56.3 million, up from $38.5 million and $31.4 million, respectively, last year.

Up the road
Tesla recently struck a $100 million deal with Toyota (NYS: TM) to help provide powertrain systems for the Japanese auto giant's RAV4 SUV model. The deal is expected to rake in close to $169 million in revenues, with production slated to begin next year and roll on until 2014. Meanwhile, Tesla has invested heavily in its Model S sedan and expects the cars to hit the road by mid-2012. It has also started developing the Model X Crossover and plans to produce nearly 15,000 in 2014. These initiatives should add to revenues in the long run.

The Foolish bottom line
Even though earnings dropped this quarter, I expect good things from Tesla. Its new models and the tie-in with Toyota should rev up its top and bottom lines in the long run. Investors should take note.

At the time thisarticle was published Fool contributor Shubh Datta doesn't own any shares in the companies mentioned above.Motley Fool newsletter serviceshave recommended buying shares of General Motors. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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