Palo Alto-based electric car manufacturer, Tesla Motors Inc. (NASDAQ: TSLA), posted higher revenues but significant losses in the fourth quarter due to research and development costs as the company prepares to launch its new Model S sedan next year.
The results, announced Tuesday, show that Tesla lost $51.3 million in the forth quarter, or 54 cents per share, compared to $34.9 million, or 38 cents per share for the same period a year ago.
Over the course of 2010, Tesla lost $154.3 million, the equivalent of $3.04 per share compared to $55.7 million or $7.94 for 2009.
Excluding one-time items, the company reported losses of 47 cents per share beating an average of analysts expectations of losses of 50 cents per share reported by Yahoo Finance.
The nascent electric automotive manufacturer, which saw an increase in vehicle sales in the fourth quarter when compared to the previous quarter but significantly higher operating expenses as the company expands its operations at the former NUMMI plant in Fremont.
Analysts had anticipated that Tesla, which held its initial public offering in June, would lose 50 cents per share in the fourth quarter of 2010. For fiscal year 2010, according to Yahoo Finance, analysts had estimated Tesla’s losses would be $2.23 per share. In the call with analysts, Vice President of Investor Relations, Jeff Evanson, challenged that figure. “Clearly this is incorrect since even before this quarter we’d already reported a year-to-date loss of $2.50 a share,” he said.
Tesla reported particularly strong growth in its partnerships with Toyota Motor Corp. (NYSE: TM) and Daimler AG (DDAIF.PK) to whom it sells components. Company Chief Executive Officer Elon Musk said in a conference call with analysts, “We did quite well in the powertrain business with increasing the deliveries and orders for the Smart EV, completion of the development program for the Daimler A-Class, and commencement of the Toyota RAV4 EV development program.”
These partnerships have led to an overall increase in Tesla’s revenues, which at $36.2 million last quarter were nearly double the $18.5 million reported for the fourth quarter of 2009. Sequentially, revenues increased to $36.2 million over the $31.2 million reported in the third quarter.
Musk added, “On the Roadster business, they are doing pretty well. It’s increased 10 percent sequentially in revenue driven by better selling prices and a favorable leasing mix.” The company reported that, over the quarter, 149 Roadsters were delivered worldwide.
Looking forward, Tesla’s Chief Financial Officer Deepak Ahuja said the company expected a significant jump in revenues in the coming year. He said, “We project revenue to increase by above 40 to 50 percent in 2011 to a range of $150 million to $175 million. We expect Roadster sales to grow over last year, but still expect some seasonality during the winter months.”
On the conference call, analysts by and large seemed optimistic about Tesla, which opened three new retail stores over the quarter – Tokyo, Milan, and Washington, D.C. – and sold its 1,500th automobile.
The company attributed its losses to increasing acquisitions, and higher research and development costs. The company invested over $17 million in equipment costs at the former NUMMI plant, which was once co-operated by General Motors Co. (NYSE: GM) and Toyota but closed in April 2010 as part of the restructuring of the American automotive industry.
Musk noted, “With respect to Fremont, our manufacturing facility, this is really a substantially integrated manufacturing facility for the Model S. This includes stamping, plastics, paint and body assembly – body assembly shops and manufacturing of powertrain components. This is really taking advantage of an amazing infrastructure that we inherited from Toyota.”
Musk spoke briefly about the development of a crossover sport utility vehicle, which the company is calling the Model X. Tesla anticipates the Model X will be similar in cost to their hotly anticipated Model S, which is expected to be released next year. Musk said, “The Model X is a variance on the Model S platform. So, it is a crossover SUV. It’s intended to be cooler than any other SUV in its aspiration, but actually have functionality that exceeds that of a minivan. This is a tough goal to achieve, but I think we have a better shot at doing that.”
Rumors of a Tesla SUV surfaced late last year, Musk said he believes a prototype could be ready by the end of this year. Tesla’s only model, the Tesla Roadster, sells for $109,000 before incentives. Their forthcoming sedan, the Model S, is anticipated to cost under $50,000.
After the earnings announcement, shares of Tesla rose more than 8 percent to close at $24.73 at the 4.pm close of Nasdaq Stock Market trading. Shares had fallen 14 percent through yesterday but bounced back to trade in the $23.07-$24.77 range. The company’s 51-week high and low have ranged from $14.98 to $36.42.