Tesla Motors Earnings What You Need To Know
- Q4 non-GAAP EPS of $0.33, GAAP EPS loss of $0.13
- Q4 2013 Free Cash Flow of $40 million
- FY 2013 non-GAAP EPS of $0.78, GAAP EPS loss of $0.62
- Free Cash Flow loss of $6.2 million in 2013 compared to loss of $505 million in 2012
The differences in GAAP and non-GAAP according to the company are “primarily due to lease accounting for our resale value guarantee and employee stock based compensation”.
Enhancing the Customer Experience
In the 2014 letter Elon Musk mentions “customers” 11 times and begins with his first bolded underlined section Enhancing the Customer Experience which leads into describing the superior ownership experience and delivering the highest possible level of ownership satisfaction in every way.
Operating expenses and Capital expenditures to rise in 2014
The company plans to invest in the long term growth and the first quarter should see a 15% increase in operating expenses as they accelerate work on the Model X and continue to expand globally in retail.
They expect to deliver 35,000 Model S vehicles in 2014 which would be a 55% increase year over year from the 22,477 vehicles in 2013. The company expects battery cell supply issues to ease in the second half of 2014. The company will deliver its first Model S in China this spring and plans to make substantial investments there as well.
Gross margins to expand
Gross margins at a Zero Emission Credit adjusted value came in just above 25% in the 4th Quarter and they expect gross margin to increase to 28% through small design improvements, better supplier prices and economies of scale with the majority of the increase coming after Q1.
Tesla Gigafactory announcement soon
In the letter Elon Musk mentions that they would be ready to share more information about the Tesla Gigafactory and that it would allow them to achieve a major reduction in the costs of their battery packs and accelerate the pace of battery innovation.
In Three Years Create An Affordable Electric Car
The real game changer in the letter is that Elon Musk believes within three years they could create a “compelling and affordable electric car” and help address the solar power industry’s need for massive volumes of stationary battery pack. While Tesla Motors shares remain aggressively priced with an enormous amount of future growth priced in, if Musk can create a mass market electric car and along the way create additional industrial uses and put them on the inflection point of a larger industrial then perhaps we aren’t thinking long term enough. That being said large risks remain as there is a lack of any margin of safety in current share prices.