Transport Cars

Tesla’s losses widen despite increase in car sales

Feb 20, 2013 4:08 pm

Skift Take

Despite Tesla’s fanboy outcry on sites like Reddit, the New York Times review will hurt sales of the car going forward as buyers realize they’re paying tens of thousands of dollars for the privilege of being Elon Musk’s beta testers.

— Jason Clampet

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Tesla Motors Inc., the maker of electric cars run by billionaire Elon Musk, said its fourth- quarter net loss widened even as sales of its battery-powered Model S sedans increased.

The fourth-quarter net loss widened to $89.9 million, from $81.5 million a year ago, Palo Alto, California-based Tesla said in a statement on its website today. Excluding some items, the loss was 65 cents a share, compared with 69 cents a share a year ago. Analysts on average estimated a loss of 57 cents, according to data compiled by Bloomberg.

The shares fell as much as 8.9 percent to $35.12 in extended trading, after slipping 1.9 percent to $38.54 at the close.

The company named for inventor Nikola Tesla reiterated a goal of delivering 20,000 lithium-ion-powered sedans this year, after falling short of an initial target of 5,000 in 2012. Tesla is depending on the car to help it become profitable.

Operating expenses rose 29 percent to $114.7 million in the quarter, the company said, citing “significant early-stage cost inefficiencies,” including higher logistics costs and component prices.

“We expect first quarter material, labor and overhead costs to be substantially lower than in the fourth quarter of 2012, and for this trend to continue in 2013,” Tesla said.

Sales in the quarter jumped more than seven-fold to $306.3 million, from a year earlier, in line with the average analyst estimate of $306.1 million. The company delivered a total of 2,650 vehicles to customers last year, including 2,400 in the fourth quarter.

Cash flow

Tesla said it expects to post a profit excluding certain items in the first quarter, as sales of the sedan expand. Analysts on average had projected an adjusted loss of 23 cents a share in the first quarter.

The company also said it expects to be near breakeven on cash flow from operations in the current quarter.

“Ideally, cost problems they might have had during the launch are mostly behind them,” said Alan Baum, principal of Baum & Associates consulting firm in West Bloomfield, Michigan. “If that’s the case, and it seems to be, it allows them to have a more positive cash flow situation earlier than planned.”

Yesterday, the company’s stock rose 6 percent to $39.28, the most in more than three months, after the New York Times said there were flaws in a critical review it carried out of the Model S. While the paper has defended the accuracy of the story, the public editor of the Times acknowledged in an online column on Feb. 18 that there were “problems with precision and judgment” in the review.

Musk said last week the range test of the sedan by the paper was “fake,” citing inaccurate details on speed, route, use of the heating system and for failing to properly charge the $101,000 car.

The stocks has risen 14 percent this year, compared with a 6 percent gain in the Standard & Poor’s 500 Index.

Tesla management discussed the results in a conference call to be webcast at ir.teslamotors.com.

Editors: Ben Livesey, Bill Koenig. To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net. To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.

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