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Second-Quarter 2013 Tesla Motors Finances “Confusing,” According to CFO Ahuja

Tesla Motors Expanding Production to Increase Profits, Still Depends on Supplier Output
Tesla Motors Expanding Production to Increase Profits, Still Depends on Supplier Output

Tesla Motors stock continues to rise, $156 at the time of this writing, which is good news for the company, but doesn’t reflect some confusing numbers released for second-quarter earnings.

On the other hand, during a Tesla Motors conference call on quarterly finances, CFO Deepak Ahuja had to admit, “this is a confusing quarter.” Depending on how fuzzy the math is, Tesla Motors, during the second quarter of 2013, either made $26 million or lost better than $30 million. So, what’s the deal?

Tesla Model S production is up, now 500 units per week, a move that Tesla Motors says was to offset a decrease in Zero-Emissions Vehicle [ZEV] credit sales to other automakers. Tesla also delivered 650 more Tesla Model S than was expected for the quarter. The slight drop in ZEV credits was expected, impacting quarterly earnings. Another impact is coming, with the announcement that Tesla Motors plans on buying 31 acres in Fremont, California, to expand the factory.

There’s only one problem with expansion, that being getting Tesla Model S parts suppliers up to speed. After all, when you count on x parts per month from y number of different companies, producing z number of Tesla Model S per month can be hobbled by a single lapse in supply. Are these suppliers taking Tesla Motors seriously?

Again, depending on how you look at it, Tesla Motors may have taken a huge hit last quarter, once you take out the funds gained by its unique “loan/purchase/buyback scheme.” Tesla Model S lessees make payments to Wells Fargo or US Bank, and Tesla Motors gets the whole amount up front for each vehicle. According to Generally Accepted Accounting Principles [GAAP], this money isn’t allowed in the profit and loss calculations, leading to the wildly different earnings reports. I guess it’s OK, considering that Tesla Motors is certainly on its own in an entirely new field of automobiles.

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