Could Tesla Motors, Inc. Report Blowout Results in Q1?

In Tesla's (NASDAQ: TSLA  ) fourth quarter of 2013, its vehicle deliveries exceeded guidance by about 17% -- a much larger margin than usual for the electric-car maker. This prompted Tesla to inform investors about two weeks after the close of the quarter that revenue would exceed guidance by about 20% when it reported results. Could Tesla make a similar announcement in the coming weeks? A new report on Model S sales in Norway suggests that Tesla's first quarter may yet again blow away its own guidance.


Source: The Motley Fool

Tesla shares are up about 3.5% at the time of this writing on a report from The Wall Street Journal citing registrations reported by Norwegian transportation officials with Model S sales numbers. According to the registrations, Tesla sold 1,493 Model S sedans in March alone. The figure is the largest monthly sales ever reported by any model in Norway -- electric-powered or not.

What this could mean for Tesla's first-quarter results
The spectacular Norway sales figures for Tesla in March are notable because Tesla only guided to sell 6,400 vehicles in Q1 -- about 500 fewer than it did in the fourth quarter of 2013. Tesla said in its fourth-quarter letter to shareholders that the reason for the lower guidance in Q1 was that "the number of cars in transit to Europe and Asia must grow substantially to support those markets." As the logistics pipeline fills, it won't be until the following quarters, Tesla said, that production will ramp up to help the company hit its annual target of 35,000 Model S deliveries in 2014.

There were 2,056 Model S sedans sold in Norway in January, February, and March. This would only leave about 4,340 Model S deliveries for the rest of Europe and North America. But it seems unlikely that global sales outside of Norway would be so limited considering that Tesla has been delivering cars in North America at a rate of about 5,000 cars per quarter for the last three quarters -- it's been supply limited in every quarter even with an advertising budget of zero.

Tesla Model S. Source: The Motley Fool

Perhaps Tesla filled its logistics pipeline sooner than expected by addressing supply bottlenecks ahead of schedule. This number from Norway doesn't make a blowout quarter for Tesla certain, but it undoubtedly makes it more likely. Notably, Tesla has beaten its own guidance for vehicle deliveries in the past four quarters in a row.

But investors should zoom out
While it's important for Tesla to continue to execute on production to prove to investors that it can consistently execute, shareholders should keep their focus on bigger-picture items that will make or break the manufacturer as a major auto player -- items like the Gigafactory, a plant purposed to build more lithium-ion batteries per year than all of the lithium-ion annual production in the world today. It's this factory that will help Tesla make its planned lower-cost electric car and sell it to the masses by 2017.

Editor's note: A previous version of this story overstated the total number of Model S deliveries in Norway during the first quarter. The Motley fool regrets the error.

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Read/Post Comments (9) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On April 02, 2014, at 6:00 PM, Ustauber wrote:

    ThxTsla

  • Report this Comment On April 02, 2014, at 9:48 PM, jameshall69 wrote:

    More stock pumping from the author. Either very poorly researched or dishonest.

    " that would imply Tesla might have sold around 3000 vehicles in Norway alone."

    Er no. Norway publishes sales data monthly unlike Tesla. January, 132 cars. February 431 cars. March 1493 cars.

    Total 2066 cars or around 2000 vehicles or around 33% less than the author reports. At least Tesla and the author consistently mislead when they report.

  • Report this Comment On April 02, 2014, at 9:54 PM, AjitC wrote:

    The much larger manufacturing and assembly line that Tesla is adding could increase year end production capacity to 3x the current rate of 600 auto/week of Model S+X. By early next year production rate could reach 2,000 autos/week. Tesla now has the cash to finance expansion.

    I think that it may make sense to finance Panasonic and even Sanyo to expand their battery production with incremental investment. To sell 100,000/year Model S+X, Tesla does not need a Gigafactory. $/KW-hr will continue falling the rate of 7%/year.

    With economies of manufacturing scale, Tesla could get 30% gross profits and 15% net after taxes. Yes, worldwide, Tesla can sell 100,000 autos with ASP of around $100,000. $1.5B is profits are indeed possible, even before Model E.

  • Report this Comment On April 02, 2014, at 10:36 PM, TMFDanielSparks wrote:

    @jameshall69,

    This article doesn't suggest the stock is undervalued whatsoever. As I explain in the article, investors need to zoom out and focus on more important matters:

    "While it's important for Tesla to continue to execute on production to prove to investors that it can consistently execute, shareholders should keep their focus on bigger-picture items that will make or break the manufacturer as a major auto player -- items like the Gigafactory ..."

    Thanks for the tips on those numbers. Not sure why the WSJ implied the other months were half that figure. I'm going to see if I can adjust this article with those numbers. Thanks!

    Though Even with 1,000 less vehicles in Norway -- the massive jump in March and the implied delivery numbers that would mean for the rest of Europe and the U.S. still make a blowout quarter likely.

    Once again, a blowout quarter doesn't imply the stock is undervalued, whatsoever. It simply means Tesla offered conservative guidance -- again.

  • Report this Comment On April 03, 2014, at 10:11 AM, Haeze wrote:

    I am doubting Q1 will be a "blowout". I am long TSLA, and have followed it for a very long time. When Elon says to expect less growth for Q1, I believe him.

    The reason I doubt they will beat expectations, is that they are still supply constrained on batteries, and can not produce enough vehicles to meet demand. At the same time, they are opening the Chinese market, and need to ship a large number of vehicles there to fulfull the pre-orders. This is a large number of cars that are considered "unsold" until they reach China and get delivered, thus they count against the finite number of cars they can produce. Also take into account that many are holding back on pre-ordering a Model S to see what the Model X will be like. This means fewer pre-orders while those people hold their breath.

  • Report this Comment On April 03, 2014, at 10:36 AM, TMFDanielSparks wrote:

    @Haeze,

    Great points.

    Interestingly, since Tesla's projections have been so accurate in most quarters, a "blowout" doesn't entail much. For instance, last quarter deliveries only exceeded estimates by 17% and Tesla felt it was necessary to inform investors ahead of time. If there is a blowout, I would guess it would be of similar scale: around 17% more than expected, certainly nothing to change the premise of the underlying company's trajectory for investors.

  • Report this Comment On April 03, 2014, at 7:25 PM, emilyrobins wrote:

    Currently, two new legislations in New Jersey are being considered on Tesla Company. One of them aims to allow direct selling distribution models for automakers that produce “zero emission vehicles” and the second looks to exempt electric carmakers from adopting auto dealership models. http://j.mp/tesla-motors

  • Report this Comment On April 03, 2014, at 7:56 PM, emilyrobins wrote:

    . Ford Motor Company had previously record sales were 1,454 Sierra sedans in a month in 1986 in Norway

  • Report this Comment On April 04, 2014, at 9:45 AM, melissabrittany wrote:

    2. Exactly, the stock price of Tesla is up more than 53% year to date which is an unbelievable percentage. Their revenues are more than double in this quarter as compared to the same quarter last year. This really shows that their cars are selling like a piece of cake!

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