Tesla posts $38 million third-quarter loss

LOS ANGELES -- Tesla Motors Inc. posted a net loss of $38 million on $431 million in revenue during the third quarter -- a steeper loss on slightly higher revenue than in the second quarter.

In the third quarter of 2012, when Tesla was just starting production of the Model S, the automaker lost $111 million on $50 million in revenue.

The electric vehicle maker said Tuesday it posted a gross profit of $102 million in the latest quarter before r&d and sales, general and administrative expenses were factored.

Using non-GAAP accounting techniques, Tesla said it posted net income of $16 million on $603 million in revenue for the quarter. Non-GAAP gross margins were estimated at 21 percent.

Before some special items, the company's profit was equal to 12 cents a share, compared to a per-share loss of 92 cents a year earlier.

Wall Street analysts anticipated a profit of 11 cents a share on $553 million in sales before special items.

Still, Tesla shares plunged 14.5 percent Wednesday to close at $151.16, with trading volume topping 30 million shares -- three times greater than usual.

Tesla's non-GAAP accounting excludes noncash items such as stock-based compensation, the change in fair value related to Tesla's warranty liabilities, noncash interest expense related to Tesla's 1.5 percent convertible senior notes as well as one-time expenses associated with the early repayment of the company's Department of Energy loan.

Tesla also adds deferred revenue such as the full value of cars sold with a resale value guarantee.

Using traditional accounting methods, automotive sales represented $325 million in expenses, r&d expenses were $56 million, while selling and general administrative expenses were $77 million, Tesla said today.

The company expects r&d costs to rise 25 percent in the fourth quarter, while selling and administrative expenses are expected to increase 20 percent.

Tesla generated $26 million of free cash flow in the third quarter, bringing cash on hand to $796 million.

In the second quarter, Tesla gained $51 million in revenue from trading zero-emission vehicle credits. But third quarter revenues from ZEV credits were just $10 million as the automaker weaned itself from the regulatory exemption.

Tesla said it delivered about 5,500 vehicles, including about 1,000 Model S sedans to European clients, in the quarter. The automaker plans to deliver about 6,000 vehicles in the fourth quarter, bringing the annual sales tally to about 21,500 units.

In a letter to shareholders, Tesla CEO Elon Musk said the company plans to "increase production over the next several quarters" from the current rate of 550 cars per week.

"Demand exceeds supply, despite no advertising, no discounts and no paid endorsements," Musk said.

Tesla said its suppliers continue to expand capacity to meet its production targets.

Musk said the company recently revised its 2011 supplier agreement with Panasonic, a key supplier.

"Panasonic will increase its production capacity of automotive grade lithium ion battery cells to supply Tesla with a minimum of 1.8 billion cells over four years, more than three times our previous agreement," Musk said.

The company said its fourth-quarter financial results, on a non-GAAP basis, are expected to mirror the third quarter. Capital expenditures in the final quarter are expected to be between $75 million and $85 million, bringing total outlays for the year to $250 million.

Tesla shares dropped in after-hours trading Tuesday following the earnings announcement, after rising earlier in the day. 

The "results, with somewhat slower ramp of Tesla S deliveries, reinforce our view that Tesla had overshot in the past few months and is more properly valued at $141" a share, Barclays analyst Brian A. Johnson said.

David Phillips of Automotive News contributed this report.