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While Tesla needs to look to the future to its next car the Model X, and its plans for a massive battery factory, the electric car company is still solidly concentrating on ramping up manufacturing of its current Model S electric car over the course of this year. In an earnings statement released on Wednesday Tesla said that it made 7,535 Model S cars — a record — for the first quarter of 2014, and plans to make between 8,500 and 9,000 Model S cars in the following quarter.
In total Tesla wants to deliver 35,000 Model S cars in 2014, with an eventual production rate of 1,000 vehicles per week (it’s currently at 700 per week). While the ramp up in manufacturing might sound like a relatively minor move, the amount of lithium ion battery cells available to Tesla is actually one of the more substantial dampeners on that growth. Tesla says in its shareholder letter that “battery cell supply will constrain development in Q2 but improve in Q3.”
Tesla is looking to ramp up shipments of Model S cars to China and Europe significantly this year. Tesla says China could be one of its largest markets within a few years. Musk said on the earnings call that he was “blown away” by the interest and enthusiasm in Tesla in China, and in three to four years Tesla could manufacture cars in China for the Chinese market. Musk also said they are considering manufacturing locally in Europe, too, for European customers.
Beyond the Model S, Tesla is working on the production design prototypes for its Model X crossover electric vehicle, and the company says those will be available in Q4 of this year. Tesla also started producing powertrains for the Mercedes B-class this quarter.
For the factory, Musk announced on the call that Tesla has a signed letter of intent with Panasonic as a partner on its battery factory. Tesla CTO JB Straubel said in the call that Tesla and Panasonic have a joint working team focused on exploring mutual topics, answering questions, and making progress on closing the deal on the battery factory. Straubel said that Tesla is heading toward a final agreement with Panasonic later this year.
Tesla could break ground on one of the potential sites for the battery factory as soon as next month. The company will break ground on another potential site shortly after that. Tesla will move the process along on two sites until it chooses one. Musk said on the call that California might be back in the running for the battery factory, but that the time to break ground on the factory in California could take too long due to regulations.
Even though Tesla beat its sales and profit estimates, the company’s shares dropped on the earnings news. Tesla’s stock fell 5.75 percent in after hours trading.
Here were the financial stats for the quarter:
- Revenue: $621 million (up from $562 million in Q1 2013)
- Net loss: $50 million or a $0.40 loss per share (Tesla made a profit of $11.25 million in Q1 2013)
- GAAP gross margin: 25.3 percent
- Tesla set aside a unplanned $2 million reserve for the under body plates it released earlier this year.
- Tesla spent $82 million in R&D expenses for the first quarter.