Tesla Still Rocking It — 2014 Breakdown

Originally published on EV Obsession.

The folks at Tesla aren’t stupid. They know what to highlight to make a point. The first sentence in the 2014 4th quarter & full year shareholder letter Tesla published last night reads: “Tesla continues to drive the global transition to sustainable transport, with more pure electric car revenue than all other companies combined in 2014.” Wow. That puts some things into perspective.

Of course, the Nissan LEAF was the top-selling pure-electric car, but at a much lower price, and with buyers not jacking up their vehicles’ prices by ~$50,000 with added features or better performance, the news from Tesla isn’t actually that surprising. Still, it shows one thing: Tesla is pulling in a lot of money, and is the big dog in the electric car market.

The next sentence: “From 2012 to 2014, Tesla non-GAAP revenue grew by almost 800% and GAAP revenue grew by almost 700% while gross margin simultaneously increased to unusually high levels by automotive standards. Moreover, as implied by the graph below, both vehicle production and demand are expected to accelerate in 2015.”

Production will clearly ramp up almost continuously if demand increases and battery or other supply bottlenecks are not an issue. Demand is very likely to jump a great deal when the Tesla Model X is finally released. With nearly 20,000 reservations on the books, it’s clear that Tesla’s amazing and record-shattering Model S has given a lot of people the trust that the Model X will rock. However, dropping several grand on a vehicle that has been delayed for years still can’t be the norm. Once the Model X hits showrooms and the first reviews roll in, demand is just going to get that much stronger. I think it’ll blow away Model S demand and be a big next step in the world of electric vehicles.

Still, the news a lot of people held onto was that Tesla was down about $108 million in the 4th quarter on a GAAP basis (or $16 million on a non-GAAP basis), and I imagine that’s why Tesla stock (TSLA) dropped very quickly in aftermarket trading.

The good news for anyone who is long Tesla or really wants to see Tesla continue on the awesome track it has been on is that there are a lot of good and unique reasons for that. Tesla spent two paragraphs at the end of the first page of the shareholder letter discussing some of those — reasons why 1,400 cars planned for December weren’t shipped until 2015 (buyers away on holiday, ships not working, extreme weather, etc., etc.) Also worth noting is that Tesla has been putting a lot of money into Model X R&D and production preparation as well as Gigafactory construction and massive expansion globally (i.e., in Asia, Australia, & Europe), all of which are capital investments that will pay off eventually barring a force majeure.

Back to the numbers Tesla really wanted to highlight, here are some big ones:

In 2014, we also increased our number of stores and service centers by over 40%, expanded our Supercharger network by 400%, started construction of the Gigafactory and introduced numerous advances on Model S. As a result of this progress, we entered 2015 with over 10,000 orders for Model S and almost 20,000 reservations for Model X.

And then there’s also the Supercharger expansion. A record 125 Superchargers were installed in the 4th quarter, bringing the total up to 380 worldwide.

The full letter is worth a read, imho, with Tesla discussing the excited reception the Model S P85D received from the auto journalism world as well as normal people (something we have covered probably a dozen or more times by now) and the increase in orders that has resulted but will come about more and more as the masses are actually able to test drive the P85D.

With a number of interesting factory improvements, Tesla aims to get production up to about 2,000 vehicles a week by the end of 2015.