Tesla has done it again. Financials for the fourth quarter of 2013, released this week, show record sales, growing revenue and dwindling net losses. Wall Street dug it. TSLA stock has broken out past the $200 mark and set a new all-time high. By the way, the stock market utterly ignored last week’s report of a Model S garage fire.
We’ll leave the exact numbers, and the intricacies of GAAP and non-GAAP revenue, to others, but a couple of details from the Shareholder Letter are quite revealing. The company exceeded its target of 25% for its automotive gross margin (the amount of money it makes on each car sold), and has set a target of 28% for Q4 2014. “Please note that Tesla is not trying to achieve the absolute highest possible gross margin, as this would require following the industry practice of charging excessive prices to customers in certain markets, which we believe is inconsistent with building long term loyalty.”
That’s good news for Tesla fans around the world as the company focuses on expanding sales to international markets. Tesla plans to sell the Model S in China for the same price as in the US, “adding only unavoidable taxes, customs duties and transportation costs…this means that in China the Model S is priced comparably to a mid-sized premium vehicle, instead of a large luxury vehicle.”
Tesla recently announced leasing and financing options In European markets, and plans to start shipping right-hand drive models to the UK, Japan, Hong Kong and Australia this spring.
Tesla projected sales of over 35,000 Model S in 2014, a 55% increase over 2013. “Production is expected to increase from 600 cars/week presently to about 1,000 cars/week by end of the year as we expand our factory capacity and address supplier bottlenecks. Battery cell supply will continue to constrain our production in the first half of the year, but will improve significantly in the second half of 2014.”
Meanwhile, reservations are rolling in for the upcoming Model X SUV. In a media conference call, Elon Musk said, “It’s like you are going fishing, and the fish are jumping in the boat.”
In typical Tesla fashion, today’s good news was accompanied by promises of even greater goodies to come. Details of the game-changing Gigafactory will be forthcoming “very shortly,” and a few interesting bits were ready to share: “This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation. Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years. This will also allow us to address the solar power industry’s need for a massive volume of stationary battery packs.”
A couple of stock analysts noted that this will probably require Tesla to raise another large chunk of capital, something that will be easier with the stock in a new and higher range.