Tesla Misses Estimates, but Says 2015 Should be Great
Tesla reported a fourth-quarter loss of $108 million, or 13 cents a share, far below the profit of 32 cents a share analysts polled by Bloomberg expected, as its deliveries of new cars fell short of an already-lowered forecast.
Tesla shares were down over 7 percent in pre-market trading Thursday.
Bad Weather and Model Changes Held Back Tesla's Shipments
Tesla said that its shipments in the fourth quarter were constrained by "severe winter weather" and by production challenges related to the release of updated all-wheel-drive versions of its Model S sedan. The company shipped 9,834 Model S sedans in the fourth quarter, it said, falling short of a previously announced goal of 11,000.
Tesla had planned to ship 35,000 cars in 2014, but later revised that forecast downward to 33,000. The company didn't release full-year sales figures, but it appears to have shipped fewer than 32,000.
Compared to most automakers, Tesla releases very little in the way of sales and production numbers. That lack of hard data from Tesla, combined with registration data that showed fewer Model S's than expected, had led some analysts to speculate that demand for the Model S had sagged -- but Musk said that wasn't the case.
The company said it had over 10,000 orders for the Model S as of the beginning of the year, and almost 20,000 for the Model X, its upcoming crossover SUV.
The Model X was originally slated to launch in 2013, but it has been delayed significantly. Musk said Wednesday that the SUV, which features distinctive "falcon wing doors," will begin shipping in the third quarter. Tesla said it expects to deliver about 55,000 vehicles this year. Many may be headed overseas: Tesla expects more sales in China this year, where it is retrenching after a dismal early effort.
Musk Continues to Be Upbeat, Despite a Tough-Looking Quarter
Musk insisted that things were much better than they looked. "Our financials are better than they appear, not worse," he said, while suggesting that the company's market cap could approach that of Apple (AAPL) in a decade if its growth trajectory continued unabated.
That's not out of the question, but it seems unlikely from today's vantage point. Apple is the most valuable company in the world at the moment, and while Musk has talked of selling "millions" of Teslas a decade from now, it's not currently clear that demand for premium battery-electric cars will ever reach the levels needed to support anything close to Apple's market cap.
Despite years of aggressive promotion by automakers and governments, electric cars continue to represent just a tiny fraction of vehicles sold. InsideEVs.com estimates that about 120,000 electric cars were sold in the U.S. last year, out of total vehicle sales of approximately 16.5 million -- and that total includes plug-in hybrids as well as "pure" battery-electric cars like Tesla's.
The success -- and quality -- of Tesla's Model S has done a lot to make the idea of electric cars more appealing to the average consumer, but much more work needs to be done if battery-electrics are ever to be more than a niche product.
Mixed Reactions From Wall Street
Analysts reactions to Tesla's earnings report were mixed. While some were reassured by the company's upbeat 2015 expectations, J.P. Morgan (JPM) auto analyst Ryan Brinkman downgraded Tesla shares to "underweight" from "neutral," saying in a note to investors that "while other automakers are beginning to emulate Tesla in important respects, it is not lost on us that Tesla is in some way beginning to look more like other automakers."
One way in which Tesla is starting to look more like its big rivals is that its costs are going up. Brinkman noted that the company's guidance calls for $1.5 billion in capital expenditures in 2015, significantly above previous expectations.
Musk seemed to scoff at such concerns during the earnings call, when he said that Tesla could plow a "staggering amount of money" into capital spending without needing to sell much in the way of additional stock or bonds.
But a cost structure comparable to that of traditional automakers would be bad news for Tesla's stock: Automakers are traditionally valued at just about 10 times earnings.
Motley Fool contributor John Rosevear owns shares of Apple. The Motley Fool recommends Apple and Tesla Motors. The Motley Fool owns shares of Apple, JPMorgan Chase and Tesla Motors. Try any of our Foolish newsletter services free for 30 days.