Tesla Reveals Widening Losses, Promises Model X, Wall-Mounted Battery Pack For Your Home in Six Months

Yesterday marked the official release of Tesla Motors Q4 earnings, as well as the release of its Full Year 2014 accounts. With an extremely hectic and expensive year now behind it that included a planned plant shutdown and the knock-on effects of some truly terrible weather towards the end of the year, Tesla posted a net loss of 13 cents per share using non-GAAP measurements, or 86 cents per share using GAAP methods.

Tesla posted a loss during Q4, but has big hopes for 2015.

Tesla posted a loss during Q4, but has big hopes for 2015.

In total, that equates to an unexpected non-GAAP net loss of $16 million in Q4, or a GAAP net loss of $108 million. The latter is larger because it does not allow a company to include the inherent value of deferred revenue, such as money paid in lease fees under the residual value guarantee program.

Because Tesla sells and leases its cars directly to customers rather than through a franchised dealer network, Tesla quotes both Non-GAAP and GAAP figures, noting in its shareholder letter that other automakers can include revenue from leased cars in their GAAP balance sheet since the car is ‘sold’ first to the dealer, while Tesla — or its finance provider — essentially retains ownership of the vehicle and thus cannot record it as a sale.

Musk: Model X will launch in 6 months' time.

Musk: Model X will launch in 6 months’ time.

The losses, Tesla said, were caused in part by heavy spending on its many projects, including the building of its massive lithium-ion manufacturing and reprocessing Gigafactory in Reno, NV., alongside expansion of Tesla’s sales and service network, Supercharger installations, and the building of a new paint facility in Fremont, CA., where the Tesla Model S (and soon to be Model X) are made.

Another major headache for Tesla during Q4, 2014 came from several severe winter storms in North America, making it impossible to deliver new cars to customers affected by some of the worst snow the mid west and north east has seen for years. With deliveries delayed, Tesla found itself paying more aborted delivery attempts and of course, couldn’t finalise as many sales as it would have liked.

Musk: Tesla Model S P85D proving popular with customers.

Musk: Tesla Model S P85D proving popular with customers.

Despite the widening losses, causing a downward slide in Tesla’s share price in after-market trading, Tesla Motors [NASDAQ:TSLA] CEO Elon Musk remains upbeat about the company’s prospects for 2015, promising more than 55,000 Model S and Model X electric cars will be produced and shipped during this year. That’s a massive 70 percent increase over 2014 deliveries, with 40 percent of those promised by Musk to ship in the first half of this year.

Countering rumours to the contrary, Musk also confirmed Tesla is close to building the Model X crossover SUV, and aims to start deliveries of this important plug-in car within six months. Those who are keeping track will note that this puts first deliveries bang in line with Tesla’s November announcement slating a (yet again) delayed Q3, 2015 launch.

Of Model X development itself, Musk says Tesla now has around 30 ‘beta’ Model X cars in operation, testing the current iteration of the seven-seat pre-production car in as many different situations as possible. Given the increase in Tesla Model X sightings of late, it’s hardly surprising that number of cars are now being given some pretty tough shake-downs before Tesla builds a fleet of “Release Candidate” cars next month ahead of the final Production-Intent models later this spring.

Also mentioned in detail in the Q4 Shareholder Letter is the Tesla Gigafactory, which Tesla says will start producing lithium-ion batteries next year in time for the development and production of Tesla’s promised 2018 Tesla Model ≡ ‘affordable’ electric sedan.

But there are two other things that Tesla announced that we weren’t expecting to hear about: an expansion of high-powered ‘destination’ chargers and the development of a home-based battery pack designed to offer backup power for homes.

Tesla is promising a battery pack to help customers power their homes from renewable energy.

Tesla is promising a battery pack to help customers power their homes (and their cars) from renewable energy.

Regarding the former, Musk says Tesla will expand its Destination Charging program into Europe. Currently at around 900 locations in Asia and North America, Tesla high-powered wall connectors provide Tesla Model S customers a way to conveniently charge their car overnight while they sleep, eliminating the need to find a Supercharger at the end of a long day on the road.

The latter, only disclosed by Musk during the shareholders call late yesterday, promises a wall-mounted battery pack that would enable customers to not only backup power during an emergency, but a way to power their homes around the clock from energy harvested from solar panels.

“We are trying to figure out what would be a cool stationary pack,” said Musk during the call. “Some will be like the Model S: something flat, 5-inches off the wall, wall-mounted, with a beautiful cover, an integrated bi-directional inverter and plug and play.”

Like Nissan’s LEAF2Home system, we’re assuming the un-named static battery would also allow Model S owners to use their car as supplemental backup power in an emergency, meaning the entire local electricity grid could fail yet leave a Tesla customer powered and secure in their home.

Yet the backup battery wouldn’t just be for emergencies, JB Straubel, Tesla’s Chief technical officer added on the same call.

Tesla is also continuing its Supercharger and HighPowered Wall Charger rollout.

Tesla is also continuing its Supercharger and HighPowered Wall Charger rollout.

“The long-term demand for stationary energy storage is extraordinary,” he said. “We’ve done a huge amount of effort there and have talked to major utilities and energy service companies.”

While neither would give any further details, Musk did say that production of the battery pack could happen within six months. With the Gigafactory just a year from completion, we’re guessing that Tesla will also be able to make such a product far more affordable than anything we’ve seen to date, using recycled battery packs from Tesla’s Roadster and Model S cars to provide a second-life before full reprocessing would be required.

As always, we’ll bring you more as soon as we have it.

Do you think Tesla’s Q4 earnings report was disappointing, or to be expected given the amount of projects Tesla undertook last year? And do you believe Tesla will meet its own deadlines for Model X production, Gigafactory launch and the upcoming battery pack?

Leave your thoughts in the Comments below.


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  • Ad van der Meer

    Any hick up in sales and/or deliveries combined with the spending spree Tesla is on is bound to cause havoc on the quarterly earnings. They will have to step up their game in 2015 to keep free cash flow in line with their spending.nI am surprised that they are starting to sell their battery packs for “home” storage so soon. I would have expected that to come with the opening of the Gigafactory. I am very curious at what $/kWh price level the pack will be sold.

    • Matt Beard

      I wonder if they have a stock of “failed” new batteries that are not up to being used in EVs, but would be good enough for stationary use.

  • Chris O

    One has to spend money to make money. Tesla’s payday will come when Model 3 hits the market u00e1nd it sells in the sort of very large numbers Tesla is preparing for.nnnUntil then Tesla will mostly lose money which will be used by EV detractors to prove that there is no money in making EVs despite the fact that Model S with its 26% gross margin clearly is a very profitable car except that all the profit is immediately spend on widening the range and offering support infrastructure.

    • Joseph Dubeau

      Small cars = small profits. nThey have pretty good margins on their Model S.

      • Chris O

        Not much margin on a $35K 200 mile EV no doubt but by the time you have specced it out and en up paying north of $45K things will look pretty good for Tesla. A production run that’s planned to be an order of magnitude larger will do the rest plus it enables lower battery cost (the Gigafactory effect) which also increases margins on the high end models.

  • D. Harrower

    Personally, I’m not at all concerned about Tesla’s reported losses for the year. A huge chunk of their profit goes back into R&D for new products/services, hiding how much they truly made. Plus they are massively expanding on multiple fronts: service centers, stores, charging infrastructure, etc. All that stuff requires massive cash but once established related expenses should trickle down to almost nothing. If we see similar losses for the next year or two I might start to worry.