Tesla Motors (NASDAQ: TSLA)’s Impressive Second Quarter Earnings

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By Mark Michaels on August 5, 2014 Company, Consumer Staples, Technology & Software

When Tesla Motors (NASDAQ: TSLA) released its second quarter earnings report for the 2014 fiscal year on Thursday last week, the market exploded. Tesla reported that it beat out expectations for revenue and earnings per share, and the stock price experienced huge jumps and drops in after hours trading, despite the strong earnings report.

However, the huge swings in stock price were expected. Tesla’s stock price is mostly driven by the company’s future prospects, but there are more important factors that will affect the company’s performance in the market.

Overall, the company’s shares increased by 4% by the end of trading on Friday.

Investors and analysts can gain much insight from the second quarter report, detailed below:

Tesla’s Plan For Next Year

Assuming that there are no serious bumps in the economy, the electric car company plans to deliver over 100,000 units by the end of 2015.

If Tesla can pull this off, it would be a huge accomplishment considering that the company plans to deliver only 35,000 units by the end of this year 2014.

The company’s CEO Elon Musk, substantiated that claim by reminding investors of the expectations of the upcoming Model X SUV to be released early next year, which is supposedly make up about half of that goal.

Musk also said that the number of annual shipments next year could be higher than 60,000. This could push year over year growth in deliveries to over 100,000 vehicles by the end of 2015.

Demand For Tesla’s Vehicles

The electric car maker seems confident that the demand for its electric vehicles will not wane anytime soon. The second quarter report states that even though the company increased both deliveries and production, the average delivery wait times actually increased as well. This suggests that the company’s growth in production rates was not able to keep up with the increase in the demand.

And to quell rumors that the demand the company’s Model S has reached its height in North Amerca and in certain European markets, Tesla reported that orders are increasing at a faster rate than the rest of the automotive industry in both regions. The company expects demand to further increase all over the world as customer support systems improve and consumer awareness grows.

Tesla’s Model X

It seems that the Model X will be the key factor in Tesla’s success in the near future.

According to the second quarter letter, the development efforts for the Model X is on track for release in the spring of 2015. The company expects to have operational prototypes ready by next week, and for Beta prototypes to be ready by the end of this year 2014.

The Gigafactory

And of course, investors can’t forget about Tesla’s Gigafactory. The factory plans to manufacture lithium ion batteries to power Tesla’s electric vehicles. Tesla has stated that they will “slightly accelerate our investments in production capacity an the Gigafactory.”

Any acceleration to this massive project is a formidable task. The Gigafactory is supposed to have a capacity for production of batteries for 500,000 vehicles per year by 2020.

Additionally, the Gigafactory could result in massive savings for Tesla. Elon Musk stated that he would be disappointed if it took the company ten years to get to the point of making $100 per kilowatt hour battery.

Musk’s statement implies that, within the next ten years, electric vehicles would reach the same cost, or even beat, that of an internal combustion engine vehicle.

Tesla’s Secret Weapon?

Tesla stated during the earnings call that it is currently “not revealing all of our cards.”

What could this secret card be? While Tesla is not letting on any more information, investors can assume that it is already costing the company operating expenses, and it could be boosting the company’s CapEx and R&D reports, according to Musk.