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Tesla Downplays Earnings Shortfall

Maker reveals $40 million in advance orders for Model X CUV.

by on Feb.16, 2012

Earnings down but prospects good, says Tesla as it reports $40 mil in advance orders for the Model X.

How do you judge a company that is still months away from launching its first truly significant product?  That’s the question that drove after-hour traders into a frenzy when Tesla Motors reported its financial results for 2011.

On the down side, Tesla revealed a full-year loss that was worse than originally anticipated, reflecting the heavy investment as it prepares to launch both its Model S battery sedan and the Model X crossover that will follow a year later.  More upbeat was news that revenues rose for the year, driven by sales of the limited-volume Tesla Roadster and by the alliances the maker has formed with both Toyota and Daimler AG.

Meanwhile, Tesla also reported that within 24 hours after revealing the Model X, last Thursday evening, it had already netted $40 million in advance sales for the battery-electric vehicle more than a year before it comes to production.

“When you introduce a product that is really groundbreaking and innovative, you don’t necessarily know how customers are going to react to that, and they reacted incredibly well,” said Tesla founder and CEO Elon Musk, during a conference call to discuss the company’s latest news.

In a letter to shareholders, meanwhile, Tesla revealed it has started a development program with Daimler to develop a new electric vehicle program for the German company’s Mercedes-Benz brand. A Tesla-powered version of the Toyota RAV4 is, meanwhile, due to market later this year.

Those alliances helped drive 2011 revenues up by 75%, to $204 million, for all of 2011.  Revenues for the fourth quarter increased 9%, to $39 million.

But the maker lost $264 million for the year, or $2.53 a share, with the loss for the fourth quarter pegged at $81 million, or $0.69 a share.  That was almost 5% higher than the consensus estimate of $0.64, which triggered some frantic ups-and-downs in after-hours trading after Musk’s late Wednesday conference call.

But while some investors are clearly worried about Tesla’s ability to translate its headline-grabbing power into actual sales and earnings, others are more upbeat.  That includes Deutsche Bank analyst Rod Lache, who pointed to the maker’s cash reserves of $493 million – which includes $304 million it can still tap into from a Department of Energy loan.

That, said Lache, “is more-than-sufficient to reach 2013 (so) we continue to believe that Tesla is uniquely positioned to succeed as a new automaker.”

With the Model S due to arrive this year, Tesla is projecting it could nearly triple revenues for the year, to somewhere between $550 million and $600 million, most of that increase coming in the final months of 2012.

So far, the maker says it has taken 8,000 reservations for the Model S, and another 500 for the Model X, each with $5,000 downpayments.

Meanwhile, the maker is reportedly working on a third model line to follow sometime around mid-decade.

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