Tesla Motors released financial details from its second quarter today to post a net income loss of $30.5 million or 26 cents per common share.
The number stands in stark contrast to the first quarter where Tesla reported an income of 10 cents per share or over $11.2 million. Auto sales revenue sunk by $156 million compared to last quarter because of a GAAP (Generally Accepted Accounting Principles) requirement that defers some revenue from vehicles financed through the company and its partners.
On a non-GAAP basis, Tesla posted a net income of $26 million, up 70 percent from the first quarter. Tesla said in a letter to its investors that non-GAAP profits exclude stock-based compensation, the change in fair value related to Tesla’s warrant liability, the impact of lease accounting, non-cash interest expenses and one-time expenses associated with repaying the Department of Energy loan.
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Despite the net income loss, Tesla’s production increased to 5,150 cars to surpass the expected 4,500 units. The company said it earned a gross profit of 22 percent on a non-GAAP basis, and CEO Elon Musk said he sees the company on track to reach his previously states 25 percent gross profit margin goal by the end of the year.
Right now, Musk says the automaker’s biggest struggle is with suppliers not being able to deliver. Conservative forecasts about Tesla’s ability to sell cars deterred suppliers from tooling up for the company’s requested capacity.
Having beaten those numbers several times over, Musk says 90 percent of its suppliers are able to increase available parts to build the Model S. The bottleneck comes from roughly one percent that aren’t able to increase supply volumes and Tesla hopes to have cleared those problems by about this time next year.
Production won’t increase until all of the company’s suppliers are able to deliver.
“You can’t give people a car that’s 99 percent complete,” Musk said. “Some suppliers are not set up for volume production. We’re striving to become demand-limited, rather than production-limited.”
While the Model S remains the key focus for Tesla, Musk said it is still hard at work developing the Model X SUV based on the Model S. Initial delivery is still expected to begin sometime late next year with higher volume production in 2015.
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