It’s official: the mysterious groundworks we told you about last week in Reno, NV has been confirmed as one of multiple sites being developed by Tesla Motors for its massive Gigafactory battery reprocessing and manufacturing facility.
Reno just one of many sites
The confirmation was just made by Californian-based Tesla Motors [NASDAQ:TSLA] in its official Q2 2014 Shareholder letter, in which the company confirmed that Tesla broke ground just outside Reno on a site that it says could ‘potentially be the location for the Gigafactory.’
But, says the electric automaker, the commencement of groundworks in Reno, NV last month does not indicate that the Gigafactory will ultimately be built there. Instead, it said in the official shareholder letter, the first ground-broken site will be one of several being developed by Tesla in order to ensure there are zero delays in bringing the Tesla Model 3 to market.
Working to minimise delays
“We see these concurrent efforts as prudent. This vehicle will be our third-generation product and will substantially broaden the addressable market for Tesla, helping to accelerate the transition towards sustainable transportation,” Tesla said. “Any potential duplicative investments are minor compared to the revenue that could be lost if the launch of Model 3 were affected by any delays at our primary Gigafactory site.”
Despite what many analysts have said, Tesla says that the costs associated with developing multiple sites as potential Gigafactory locations isn’t as high as the lost revenue if the mass-market, affordable Tesla Model 3’s launch date was pushed back by delays in the Gigafactory construction process.
Failure, it seems, is not an option.
California officially in the running
Also worth noting in the shareholder letter is the official confirmation for the first time since the Tesla Gigafactory concept was unveiled last year that California is now being considered as a host state for the Gigafactory.
Originally ignored due to tough regulatory constraints regarding building permits and environmental protection policies, it appears that Tesla has been working hard with the State of California to try and way to keep its Gigafactory local to the Fremont factory where Tesla makes its Model S sedan and soon-to-launch Model X crossover SUV.
And while Reno, NV appears to be the site chosen by Tesla for the state of Nevada, there are now four, not three other states are still in the running: Arizona, California, New Mexico and Texas.
Tesla on track for 35,000 cars this year, Model X by end of 2015
Elsewhere in the official Q2 Tesla Shareholder Letter cam good news on Tesla’s existing Model S production, with the promise that Tesla is on track to exceed its 35,000 vehicle delivery target for the year.
Tesla produced 8,763 vehicles during Q2 2014 — a production increase of 15 percent over Q1 — and delivered 7,579 of those vehicles to customers around the world. That may seem far off the 35,000 car target Tesla has set itself, but the firm says the current two-week shutdown at the Fremont facility where the Model S Sedan is made will help dramatically improve factory output to an average production volume of more than 1,000 vehicles per week during Q4, 2014.
Provided there are no shocks caused by economic crises, Tesla says it will be producing 100,000 cars per year by the end of next year, partly caused by the commencement of Model X production next year. Based on the Tesla Model S sedan, the Model X Crossover SUV is expected to enter into production next spring.
Earnings per share up
Aside from exiting times ahead for Tesla’s vehicle lineup and Gigafactory plans, Tesla also reported an increase in earnings per share for Q2 compared with this time last year.
Despite a consensus forecast from Wall Street of $0.04 EPS, Tesla managed a far larger $0.11 EPS using the non-GAAP financials. Recording revenues of $858 million using the non-GAAP financial method, Tesla’s revenues are up 55 per cent from this time last year and gross margins are up 26.8 per cent from Q1, 2014.
Using the GAAP basis however, things are a little less rosy, with Tesla making a loss of $61.9 million, almost twice the loss recorded last year and equivalent to a loss per share of $0.50. However, it should be noted that Tesla’s preferred method of reporting — the non-GAAP method — takes into account the guaranteed resale value of cars sold and leased to customers under its guaranteed resale value program.
The GAAP method of accounting does not, making Tesla argue that its non-GAAP financials are a better indicator of its true health as a company.
Do you think Tesla’s latests Q2 profits show a company striding towards more exciting and ever-expanding horizons, or do you think that things are not quite as bullish as they could be?
And how do you feel about the confirmation that Reno, NV is one of Tesla’s candidate sites for the Gigafactory? Finally, where do you think the Gigafactory will be built?
Leave your thoughts in the Comments below.
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