Tesla Reports $16 million Profit … or $62 million Loss

Silicon Valley automaker Tesla Motors has long been criticized for eschewing generally accepted accounting standards in its quarterly financial results. That hasn’t hurt the company on Wall Street, though its stock dropped $5.62 to $223.30 a share before it released second-quarter 2014 results Thursday.

The company reported a profit of $16 million for Q2, using non-GAAP accounting, and used those figures in its conference call with analysts late Thursday. But, using GAAP accounting, it lost $62 million for the quarter, according to its shareholder letter.

Tesla reported record production of 8763 Model S units from its Fremont, California, plant and record global demand of 7579 units for the second quarter.

The automaker’s new Model S/Model X production line is scheduled to start up next week. The Model X is Tesla’s new, all-wheel-drive three-row crossover/utility vehicle with falcon doors.

“Provided we execute well and there are no serious macroeconomic shocks, Tesla’s annualized delivery rate should exceed 100,000 units by the end of the year,” the company says in the Q2 ’14 letter to shareholders.

Answering a question on how Tesla can service all the cars it’s selling, especially after it reaches the 100,000 per-year level, CEO Elon Musk said the automaker has recruited Formula 1 team pit crews to train technicians how to service cars. Musk said his technicians drop in and out of a service job so quickly — “like elves” — owners hardly notice their cars are gone.

The typically obsequious analyst who asked that question also asked about Tesla partner Toyota’s work on hydrogen fuel-cell vehicles, the subject of a recent public argument between the two automakers. The question prompted Musk to launch into a tutorial on hydrogen’s low density.

Tesla’s letter to shareholders also announced completion of a deal with Japanese electronics giant Panasonic to build Tesla’s Gigafactory for battery cell production, likely to be just outside Reno, Nevada.

For the three months ended June 30, Tesla reported $768 million in gross revenue from automotive sales, compared with $402 million for Q2 of 2013. It earned $1.1 million in development services from providing electric motor technology to Mercedes-Benz and Toyota, down from $3.6 million a year earlier.

Tesla’s net loss of $62 million compares with a loss of $30.5 million a year earlier. But when the resale value of off-lease Teslas under the guaranteed-buyback program is factored in, a non-GAAP accounting method, the company had a net gain of $16 million in Q2 ’14 versus $26 million in the same period last year.