Earnings Preview: What To Expect From Tesla’s Q2 Numbers
Tesla Motors (NASDAQ: TSLA) is set to announce financial results for the second quarter of the fiscal year 2016. As ever, the focus will be on the company’s production rate and the lag between deliveries and production. In the previous quarter, the company produced around 15,500 vehicles, a 10% increase over the fourth quarter of fiscal 2015. Averaged over a 13 week period, that implied a production rate of around 1,200 vehicles per week. Taking into account holidays and weekends, the production rate was probably slightly higher. In this quarter, the company said that it produced 18,345 vehicles, implying a weekly production rate of just over 1,400 vehicles per week. However, the company stated that the production rate was “just under 2,000 vehicles per week”. This discrepancy is hard to reconcile but apparently refelcts a steep ramp at the end of the quarter.
Over the April-to-June period, the company said that it delivered just over 14,370 vehicles, including 4,625 Model X SUVs. This number was significantly below the company’s stated target of 17,000 units for the quarter. According to the company, some 5,150 vehicles were still in transit towards the end of the quarter and will be delivered in Q3. The company also missed its production target. Towards the end of Q1, the company stated that it expected to increase production by 30% in the second quarter, implying a production level of over 20,000 units. The company fell short of that target by around 8.5%. While ordinarily, these things would be worrisome news for investors, it is not quite clear that it really matters in the case of Tesla. This is all the more surprising since the company plans to expand production levels close to 60%-80% over the full year, targeting 80,000-90,000 units produced for the year. This compares to just over 50,000 units last year and 10x by the end of 2018, including the production of a new vehicle. The company has missed production targets in each of the last two years — just over 50,000 in 2015 compared to a target of 55,000 units and just over 31,500 compared to a target of 35,000 units in 2015. But all these factors don’t really seem to matter all that much to Tesla’s investors.
There were three significant pieces of news for the company over the quarter:
- The company announced the planned acquisition of solar panel manufacturer, designer and financier Solar City for $ 2.6 billion.
- The company just started production at its Nevada Giga Factory. The factory will be a vertically integrated production center of lithium ion batteries for Tesla’s vehicles and battery storage products. According to company management, the factory will produce batteries with a capacity of about 50 Gigawatt hours (GWh) by 2018 and 150 GWh in a few more years. To give a sense of scale, global lithium ion battery production in 2014 was just 30 GWh in 2014.
- The company announced new future plans, which include a vertically integrated solar roof panel and storage product, an affordable SUV, a Tesla semi, a Tesla public transport vehicle and a ride sharing service.
- How Will Tesla’s Earnings Trend After A Tough Q1 Delivery Report?
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- Down 9% Year-To Date, Will A Q4 Earnings Beat Drive Tesla Stock Higher?
- With Delivery Growth Cooling, Is Tesla Stock Still A Buy At $250?
- Following A Lackluster Cybertruck Debut, Is Tesla Stock Overvalued At $240?
We look forward to the management’s thoughts on how they plan to integrate these things into its ongoing operations.
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Tesla Motors
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