Tesla Pledges to Boost Output as Loss Widens

Electric car maker Tesla Motors Inc. reported a wider third-quarter loss and trimmed its forecast for deliveries this year, citing delays to a planned factory overhaul.

 
 
The Palo Alto, Calif., auto maker reported a loss of $74.6 million, compared with a $38.5 million loss a year ago. It also lowered its forecast for full-year deliveries of its Model S sedans by 2,000 vehicles to about 33,000.
Tesla said it earned $3 million, or two cents a share, excluding stock-based compensation, better than the one-cent a share adjusted loss forecast by analysts polled by Thomson Reuters. Vehicle sales in the third quarter were 7,785, slightly less than the 7,800 forecast by the company.
Revenue nearly doubled to $852 million from $431 million a year earlier.
“Demand is not our issue; production is our issue. And being too perfectionist about future products,” Chief Executive Elon Musk said on a call with investors. He reiterated a goal of being able to make up to 100,000 vehicles by the end of next year, and said the company would spend $350 million in its current quarter to increase capacity.
That reassurance helped push its shares up 7%, or $15.62, in after-hours trading after finishing off $7.96 at $230.97 in 4 p.m. Nasdaq trading.
Two weeks ago, industry trade publication WardsAuto estimated that Tesla’s U.S. sales for the first nine months this year had fallen by 26%. Mr. Musk disputed it at the time, saying its world-wide sales in September were at a “record high.”
The company continued to reap significant cash from selling emissions credits. In its latest quarter, Tesla said it sold $93 million in credits, which help other auto makers offset sales of gas-hungry vehicles. It also collected $31 million from sales of electric powertrains, mainly to Daimler AG .
Tesla consumed $304 million in cash—about 10% of its reserves—during the quarter. It expects to sell 2,000 fewer vehicles this year after a plant equipment installation designed to increase production took longer than forecast.
Tesla is investing heavily to expand in markets in Asia and Europe while also developing its coming Model X sport-utility vehicle. Research and development expenses rose 28% in the third quarter compared with the second quarter. Overhead costs rose 18%, and the company spent $284 million on capital expenditures in the latest quarter.
“People don’t appreciate how hard it is to manufacture something. It is really hard. I have great respect for people who manufacture complex objects,” Mr. Musk said, discussing a delay to its Model X. It now plans shipments in the third quarter of 2015, a one-quarter slip.
The company forecast adjusted fourth-quarter earnings of between 30 cents and 35 cents a share. That is less than half the 75 cents a share consensus for the final quarter tallied by Thomson Reuters.
Separately, Tesla was one of four car makers to earn a 5-star rating in the latest set of European crash tests by independent regulators. The European New Car Assessment Program, or Euro NCAP, awarded its highest rating to Tesla’s Model S in a batch of six tests. Cars made by BMW AG , Volkswagen AG , and Nissan Motor Co. also received five stars, while two others were assigned four.
Achieving five stars from Euro NCAP isn’t uncommon. Eight of the past 20 cars tested received that rank. But the Model S—one of the few cars recently tested by Euro NCAP and sold in the U.S. and Western Europe—is unique in that it also has received a 5-star rating from the National Highway Traffic Safety Administration in the U.S.
“The Model S is one of just a few cars to have ever achieved a 5-star rating from both,” Tesla said in a statement. The company claims it has the only car this year to receive both a five-star Euro NCAP rating and five stars in every NHTSA subcategory, including frontal impact, side impact, and rollover.
The ratings, often viewed by customers as the gold standard of safety analysis, gives Tesla a boost at a time when it is looking to expand globally and establish its legitimacy in an industry dominated by auto making conglomerates with access to billions in capital. The auto maker has one of the few relatively successful fully electric cars on the global market.
It has been gradually rolling out new features and more attractive pricing. For instance, lease rates in the U.S. were recently lowered by as much a 25%, an incentive made possible by its partnership with a lender that has access to lower-cost capital.
While the Model S already has features such as lane-departure warning and speed-limit warnings, more safety enhancements are slated to come. Blind spot warning and collision avoidance are “coming soon,” the auto maker said.