Tesla Chairman Elon Musk had to launch a rocket today, so the 2014 year-end earnings call for his electric car company was moved forward a few hours. It was a strong quarter -- the company met its target of producing 35,000 vehicles in 2014 and has an outlook for 70 percent growth to 55,000 vehicles in 2015.
Highlights of the quarter included:
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Non-GAAP revenue was $1.1 billion in the fourth quarter
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The company delivered 9,834 vehicles and had record quarterly production of 11,627 vehicles
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Tesla's Supercharger network now covers the U.S. coast to coast, as well as most of Europe
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The company is aiming for 70 percent growth in vehicle deliveries in 2015
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The Model X falcon-wing minivan is slated to begin shipping in six months
Depending on whether you keep score by GAAP or non-GAAP methods, Tesla expects to grow either big or really big. In fact, Chairman Musk, during the week that Apple became the most highly valued company in the history of companies at $700 billion, said, "I mean, if you take this year’s revenue, around $6 billion or thereabouts, and if we are able to maintain a 33 percent growth rate for 10 years and achieve a 10 percent profitability number and have a 20 P/E, our market cap would be basically the same as Apple's is today," adding, "Obviously, getting there requires some significant capex."
Figure: Model S Margin and Revenue Growth
Source: Tesla Q4 investor letter
The positive outlook for 2015 is helped by the 10,000 Model S orders on the books and 20,000 Model X reservations. Model X development remains on plan for initial customer deliveries starting in Q3. There were a record number of Model S orders in the quarter.
Giga factory
Construction "is proceeding to plan at the Giga factory near Reno, Nevada. Significant steel fabrication of the structure started about two months ago."
Tesla looks to start its battery pack production in 2016.
China
Recent news (120 cars sold in China last month) and management departures have suggested that Tesla was having some sales trouble in China. Musk said, "This was blown way out of proportion." The Tesla investor letter reports, "Despite initial challenges in China, we remain convinced of the vast potential of this market and are concentrating our efforts on the cities we are in currently, before launching into new cities." Musk said that despite news to the contrary, "It is not difficult to charge your car in China."
There are a total of nine Tesla stores spread across six Chinese cities.
Stationary storage
Musk said that Tesla's consumer battery for homes and businesses will be on the market "fairly soon," adding, "We have the design done."
Musk expects production to begin in six months.
JB Straubel, Tesla's CTO, added that the company is "bidding on lots of stationary storage, talking to lots of utilities," and "getting an increasing amount of attention."
2014 revenue details
Musk suggested that non-GAAP accounting produces a more accurate picture of Tesla's cash flows by recognizing lease income and revenue timing more appropriately. Non-GAAP revenue was $1.1 billion for the quarter, up 44 percent from last year, while GAAP revenue was $957 million.
Regarding GAAP methods, Musk said, "Our financials are better than they appear, not worse."
- Given that admonition, Tesla finished the year with $3.198 billion in revenue and $294 million in losses. Revenue was $1.997 billion last year with $74 million in losses.
- Q4 total company gross margin was 27 percent on a GAAP basis. Q4 automotive gross margin excluding ZEV credits was 22.0 percent. In the previous quarter, Tesla’s gross margin was 22.6 percent excluding ZEV credits.
- Automotive revenue for Q4 includes $42 million of powertrain sales primarily to Daimler. It also includes $86 million of total regulatory credit revenue, of which $66 million came from the sale of ZEV credits.
- About 55 percent of Tesla's vehicles reached customers in North America.
2015 guidance
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Tesla looks to deliver about 55,000 Model S and X vehicles, 60 percent of those in the second half of the year
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First-quarter production is expected to be about 10,000 units
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Tesla expects Q1 non-GAAP automotive gross margin to be about 26 percent
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The company expects a 30 percent gross margin on Model S in Q4 of 2015
A few more tidbits from Chairman Musk
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"We were production-constrained. We look forward to getting demand-constrained in the future."
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There "are a lot of cars in transit."
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Faced with increasingly larger factories and workforces, Musk said he is "not sure where 100,000 people are going to park."
- "We were production-constrained. We look forward to getting demand-constrained in the future."
- There "are a lot of cars in transit."
- Faced with increasingly larger factories and workforces, Musk said he is "not sure where 100,000 people are going to park."