Tesla shares fall after the company lowers its delivery guidance

 
James Nickerson
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Tesla said the Model X will be on sale by the end of the third quarter as planned (Source: Getty)

Tesla shares fell four per cent in after hours trading after the company put the breaks on 2015 deliveries.

The figures

Tesla reported a second quarter earning per share loss of $0.48 on $1.2bn (£0.77bn) in adjusted revenue, 40 per cent up from a year ago.

This was, however, better than the expected $0.59 loss per share.

Manufacturing numbers, seen by many as key, were at 12,807 vehicles, 46 per cent up from a year ago. It is also up from the 11,600 cars built in the first quarter, and above the target of an increase of 12 per for the second quarter to 12,500 cars.

The company also delivered 11,532 cars this quarter, after delivering 10,030 in the first quarter. The company has delivered 21,562 vehicles in the first half of the year.

The company posted a second quarter net loss of $184m.

Second quarter revenue was $955m, up from $769m in the same period a year ago.

Why it’s interesting

Manufacturing targets have been an ongoing problem for Elon Musk’s company after they missed the targets last year. But it is deliveries that are the concern now, with the company delivering 11,532 vehicles this quarter, and 10,030 in the first quarter.

Despite current deliveries, the company has lowered its 2015 deliveries view to 50,000-55,000 vehicles. As a key figure, this will disappoint investors. In May Tesla said that it expected around 55,000 Model S and Model X combined.

Investors will be looking to the second half of the year, especially to see if Model X is on schedule for delivery in the third quarter. They will also hope to see good sales from Model X to reach its target by the end of the year.

This comes weeks after UBS downgraded Tesla shares to “sell”, expecting disappointing growth from the company’s electric car and home battery segments.

Read more: Tesla Motor's share price down as analysts expect growth will "disappoint"

Investors may, however, be pleased to see that Tesla "improved our operational efficiency for the second quarter in a row."

What Tesla said

Tesla CEO Elon Musk and CFO Deepak Ahuja said in the statement:

While our equipment installation and final testing of Model X is going well, there are many dependencies that could influence our Q4 production and deliveries.

We are still testing the ability of many suppliers to deliver high quality production parts in quantities sufficient to meet our planned production ramp. Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter.

Furthermore, since Model S and Model X are produced on the same general assembly line, Model X production challenges could slow Model S production.

Simply put, in a choice between a great product or hitting quarterly numbers, we will take the former. To build long-term value, our first priority always has been, and still is, to deliver great cars.

In short

The key factor is Tesla is not confident it will meet its sales target of 55,000 vehicles this year, which will make investors hesitant.

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