Tesla Trims Delivery Outlook, Sending Stock Down


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A Tesla Model S in Beijing.

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Ng Han Guan/Associated Press

Even as Tesla Motors painted a better-than-expected financial picture in announcing its second-quarter earnings on Wednesday, it warned of fewer car deliveries for the year, sending the stock tumbling.

On the positive side, Tesla said it had brought in slightly more revenue, and had less of a net loss, than analysts had expected. In addition, Tesla, which makes high-end electric cars, said the first deliveries of the much-awaited Model X sport utility vehicle were on track for September.

But Wall Street recoiled at the bad news: Tesla acknowledged it might not hit its previous prediction of delivering 55,000 vehicles this year. Instead, the company’s chief executive, Elon Musk, said Tesla was revising its guidance down by as many as 5,000 vehicles, citing potential production challenges with the new Model X toward the end of the year.

Problems with the Model X could hurt production of the current Model S sedan, because the two vehicles will be manufactured on the same assembly line at Tesla’s factory in Fremont, Calif.

Photo

Elon Musk, chief executive of Tesla Motors.

Credit
Ringo H.W. Chiu/Associated Press

“We do think it’s going to be quite a challenging production ramp” with the new S.U.V., Mr. Musk said on Wednesday in a conference call with investors. “We don’t want to drive to a number that’s greater than our ability to deliver high-quality vehicles.”

He called the new Model X “a particularly challenging car to build.”

Tesla met its target for second-quarter deliveries, however, with 11,532 vehicles transferred to customers.

Asked whether the reduced outlook for deliveries would prevent Tesla from turning cash flow positive by the end of the year, Deepak Ahuja, the chief financial officer, said it would be “close to call,” and might take until the first quarter of 2016 to achieve that goal.

Tesla has also been spending heavily as it prepares to introduce the Model X, and develops a more affordable sedan, the Model 3. In the second quarter Tesla spent a total of $405 million on capital expenditures, contributing to the continuing losses.

Tesla’s stock fell by 8 percent within just minutes of the announcement.

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One much-anticipated feature Tesla has promised, “autopilot,” may be only 10 days from reaching certain drivers.

Mr. Musk said a select group of Tesla owners would receive early access to the feature on Aug. 15, in what he described as a “public beta” testing. He said a “wide release” of the feature — which allows for hands-free and foot-off-the-pedals driving in certain circumstances — is planned for “one to two months after that.”

Mr. Musk described the autopilot’s initial capabilities by saying, “We don’t want to set the expectation that you can basically pay no attention to what the car’s doing.”

But he said the feature would control steering and acceleration and would be “excellent when it has a tracking vehicle in front,” in other words, in traffic, and “pretty good in the absence of that.” He said the feature would continue to be refined after its release with software updates.

Tesla’s adjusted loss for the second quarter of $61 million, or 48 cents a share, was also considerably less than the 59 cents a share Wall Street analysts had predicted. Revenue for the period was $1.2 billion on a non-GAAP basis, slightly more than the $1.19 billion analysts had forecast.

When earnings were calculated based on generally accepted accounting principles, Tesla’s net loss totaled $184 million for the quarter, and its revenue reported was $955 million.

Tesla also reported that its new program selling used cars had generated about $20 million in revenue. Cathie Wood, an industry analyst and head of ARK Investment Management, said that the fact that used Teslas were selling faster than they were coming in indicated the company might have a potential winning hand in moving into the used-car market — giving buyers in younger and more geographically diverse areas a chance to own the electric vehicles.

Correction: August 6, 2015

An earlier version of this article misstated the percentage by which Tesla stock fell during after-hours trading. It fell by as much as 8 percent, not 17 percent.



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