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Recently, $TSLA Tesla Inc. Chief Elon Musk unveiled a new Tesla truck, which was earlier expected by most. But the company unexpectedly revealed a new Tesla Roadster model, which will be on the road by 2020 starting at $200,000. Worldwide electric car sales are expected to reach 9-20MM by 2020 and 40-70MM by 2025, according to IEA.
$TSLA expects non-GAAP automotive gross margin to temporarily decline slightly in 4Q17 to about 15% and then recover starting in 1Q18, due to higher mix of temporarily lower margin Model 3 deliveries in 4Q. Gross profit is expected to grow more than operating costs in 4Q, while operating costs are expected to be flat to up slightly.
$TSLA expects Model 3 non-GAAP gross margin to reach breakeven by end of 4Q17, because of increased capacity utilization, and it should improve rapidly in 2018 to target of 25%. Capital expenditures are expected to be about $1Bil in 4Q, driven largely by milestone payments in Model 3 production equipment as well as Gigafactory 1.
$TSLA now expects that Model S and Model X are on pace for about 100,000 deliveries in 2017, an increase of 30% from 2016. The company plans to produce about 10% fewer Model S and X in 4Q compared to 3Q due to reallocation of some manufacturing workforce towards Model 3 production.
$TSLA's Automotive revenue for 3Q17 grew 10% from last year. This was mainly due to a 4.5% increase in Model S and Model X volumes. Non-GAAP automotive gross margin declined to 18.7%, due to a significant increase in Model 3 manufacturing costs to support the limited initial level of production.
In Q3, $TSLA deployed 110 MWh of energy storage systems, increasing 138% year-over-year, driven mainly by increased Powerwall deliveries. To date, the company has also installed more than 80% of the Powerpacks for the South Australia project. However, revenue will not be recognized until full deployment of the project.
In 3Q17, $TSLA opened 18 new store and service locations for a total of 318 locations globally. The number of service locations grew by 6% in 3Q, while $TSLA managed to lift technician capacity by 10% per service center. Its mobile service fleet has expanded to 160 service units in 3Q17, and $TSLA is expecting this to almost double by year-end.
In 3Q17, $TSLA's Model S and X combined net orders also hit an all-time record in its North American, European and Asian markets individually. This is driven primarily by increased awareness of Tesla from the Model 3 launch and the addition of new stores internationally.
In 3Q17, $TSLA delivered 25,915 Model S and Model X vehicles and 222 Model 3 vehicles, for a total of 26,317 deliveries. Combined Model S and X deliveries in 3Q grew 4.5% globally from last year. Also, the company's used vehicle sales more than doubled from the prior quarter.
$TSLA slipped to a loss in 3Q17 from a profit last year, due to Model 3 production issues. Net loss was $619.38MM or $3.70 per share compared to a profit of $21.88MM or $0.14 per share last year. Revenue grew to $3Bil from $2.3Bil, as energy storage business installations more than doubled. Non-GAAP loss per share was $2.92 for 3Q17.
$TSLA's production for 3Q17 totaled 25,336 vehicles, with 260 of them being Model 3. Model 3 output was less than anticipated due to production bottlenecks. Although vast majority of manufacturing subsystems at both its California car plant and Nevada Gigafactory are able to operate at high rate, handful have taken longer to activate than expected.
$TSLA said it has previously indicated that 2H17 Model S and X deliveries would likely exceed 1H deliveries of 47,077, but the company now expects to exceed that by several thousand vehicles. In total, $TSLA expects to deliver about 100,000 Model S and X vehicles in 2017, which would be a 31% increase over 2016.
$TSLA delivered 26,150 vehicles in 3Q17, of which 14,065 were Model S, 11,865 were Model X and 220 were Model 3. The Model S and X deliveries represent a 4.5% increase over 3Q16, and a 17.7% increase over 2Q17. Also, about 4,820 Model S and X vehicles were in transit to customers at end of 3Q17, which will be counted as deliveries in 4Q17.
$AAXN announced the appointment of two key additions to the finance team: Jim Zito as VP of Accounting and Andrea James as VP of Investor Relations. James joins Axon after most recently supporting investor relations at $TSLA, while Zito was earlier Global Controller for $GE Healthcare Digital and Healthcare Partners.
$TSLA plans to offer $1.5Bil of its senior notes due 2025. The notes will be senior unsecured debt obligations of Tesla. $TSLA plans to use the net proceeds from this offering to further strengthen its balance sheet during this period of rapid scaling with the launch of Model 3, and for general corporate purposes.