Tesla Posts Big Loss In Q1 2014, Details Future Plans

Tesla posted an overall loss of $50 million in the first quarter of 2014, with the company’s earnings report citing the new leasing strategy and research and development expenses as significant draws on the revenue stream. The California-based company also detailed its plans for the rest of 2014 and the beginning of 2015, including the upcoming Gigafactory plant and the Tesla Model X crossover.

With 2014 being a big year for Tesla’s expansion, 7,535 Tesla Model S electric luxury sedans were produced for global delivery in Q1. China looks to be an important market for Tesla going forward, as the Model S has been well-received there so far thanks to its aggressive pricing strategy. The company also plans to install a Supercharger network in China.

This growing demand in Europe and Asia means that the company is expanding factory capacity for the Model S at the same time that it is preparing for the introduction of the Tesla Model X crossover. Although the Tesla Model X was previously slated for a debut by the end of 2014, this latest report delays that model’s start of production until spring 2015. Tesla says that production design prototypes will be ready by Q4 2014, so we expect to see the production version of the Model X during the 2014-2015 auto show season.

In terms of Tesla’s leasing strategy, the company says it reports leasing revenues differently than other car companies, which contributes to the high cost of leasing in the financial report. While other manufacturers report the full price of a leased car as revenue because the car is sold to a dealer before it is leased, Tesla reports revenue over the lease term because it does not have a traditional dealer network. The company says that somewhat diminishes its financial results, because it won’t recoup the cost of a leased car for several years.

The company’s installation of titanium underbody shields to quell worries about vehicle fires was also a significant expenditure in Q1, as the company recorded a $2 million cost for this process. After a few reports of Tesla Model S fires due to debris striking the underbody, Tesla voluntarily installed a titanium shield on all new Model S cars and also offered a no-cost retrofit to current Model S owners.

Plans are still in place for the new Tesla battery factory called the Gigafactory that was announced earlier this year. Although Tesla has not yet determined a location for this production facility, the company will reportedly break ground at this facility later in 2014, with production to begin by 2017. This will help Tesla keep up with its increasing production needs going forward, as the company currently provides electric powertrains to Mercedes-Benz and Toyota and will presumably grow its sales numbers even further as it expands the Tesla lineup to include the Model X and a possible upcoming smaller electric sedan in the future. Interestingly, Tesla says it is currently considering two different facilities, but didn’t name them.