“We are very pleased to report steady top-line growth and significant growth in gross margin, driven by the continued improvement in Roadster orders and our growing powertrain business,” said Elon Musk, CEO of Tesla Motors. “Roadster orders in this quarter hit a new high since the third quarter of 2008, having increased over 15% from last quarter. While some of this is due to seasonal effects associated with selling a convertible during the summer months, we are pleased with the global expansion of the Roadster business and the continued validation of Tesla’s technology leadership position evidenced by our new and expanding strategic relationships.”
The Roadster continued to demonstrate that all-electric driving can be both exhilarating and environmentally responsible. During the quarter, Tesla introduced the Roadster in five additional countries and opened a new store in Paris. Store openings are planned in Tokyo and Milan during the fourth quarter. Over 1,300 Roadsters are now driving in 31 countries and have logged over seven million miles as of October 31, 2010. The Roadster completed the Odyssey of Pioneers World Tour, in partnership with Tag Heuer, which showcased its ability to travel and charge around the globe with ease. Overall, the Roadster visited 16 cities on three continents and traveled over 22,000 miles.
The launch of the Model S in mid-2012 remains on track and Tesla achieved several key milestones in the quarter. In October, Tesla took title to its manufacturing facility in Fremont, California and also made selective purchases of existing manufacturing equipment in the stamping, plastics and body shops, all of which was acquired at significant discounts compared to new equipment.
“We are rapidly preparing our Fremont facility for the production of the Model S. At the same time, we have initiated our alpha build process as planned, with the goal of completing the first alpha prototype by the end of the year,” Musk said. “We have also been road testing our Model S prototype powertrain for several weeks now, with positive results.”
“We continued to garner high profile endorsements of our industry leading technology and electric powertrain systems,” Musk continued. “In October, we signed an agreement with Toyota for the development of a complete powertrain for the electric Toyota RAV4 vehicle – including the battery pack, charger, motor, gearbox and associated software. We have also recently completed all of the milestones for the Daimler A-Class battery development, and are now in the production phase. Most recently, we strengthened our six year relationship with Panasonic, announcing that the world’s leader in small format lithium ion cells, has invested $30 million in Tesla.”
Business Highlights
* Tesla completed the purchase of its automotive manufacturing facility in Fremont, California, formerly owned by New United Motors Manufacturing, Inc. (NUMMI) for $42 million. NUMMI produced over 400,000 vehicles per year at this facility. The facility will become the future home of Model S production and our next generation of high volume, mass-market electric vehicles.
* The Model S alpha build is underway with the stamping, casting and extrusion of the body panels and the assembly of the body-in-white. The first Model S alpha is targeted for completion by the end of the year.
* The Model S prototype powertrain has begun road testing to complement its ongoing laboratory testing.
* In October, Tesla completed the development of the battery and charger for the Daimler A-class electric vehicle and is now delivering production parts. For the second consecutive quarter, Tesla delivered a record number of battery packs and chargers for the Daimler Smart fortwo electric vehicle.
* In October, Tesla formalized an agreement for the development of a validated powertrain system, including a battery, power electronics module, motor, gearbox and associated software, which will be integrated into an electric vehicle version of the Toyota RAV4. Based on preliminary specifications, Toyota will pay Tesla approximately $60 million for the development services as deliverables are completed. Tesla is currently delivering early Toyota RAV4 EV prototypes.
* On November 2, Panasonic purchased 1,418,573 shares of common stock for $30 million at a price of $21.15 per share. Tesla has worked with Panasonic/Sanyo for approximately six years, and currently uses Panasonic cells in the Daimler Smart fortwo and Daimler A-class vehicles. Tesla also intends to use custom 18650 cells that it designed in partnership with Panasonic in the Model S on a non-exclusive basis.
* Tesla opened up a new store in Paris and now operates an international network of 14 stores. Stores in Tokyo and Milan are scheduled to open during the fourth quarter.
* Road & Track Magazine recognized the Tesla Roadster as having one of the highest resale values in its class.
* The list of countries with electric vehicle incentives continues to grow. Japan announced a tax refund of $38,000 for the purchase of a Roadster. In the United States, the Roadster now qualifies for a tax credit of almost $25,000 in the State of Louisiana.
Tesla also reports its financial results on a non-GAAP basis. On a non-GAAP basis, net loss for the quarter was $34.2 million as compared to a non-GAAP net loss of $26.1 million in the prior quarter, reflecting significantly increased spending on research and development of Model S partially offset by improved gross margin. Non-GAAP net loss excludes charges related to stock-based compensation and the change in fair value related to our warrants. A reconciliation of GAAP results to non-GAAP results is included below.
Tesla’s goal is to produce increasingly affordable electric cars to mainstream buyers – relentlessly driving down the cost of EVs. Palo Alto, California-based Tesla has delivered more than 1,300 Roadsters to customers in North America, Europe and Asia. Tesla designs, develops, manufactures and sells EVs and EV powertrain components. The Tesla Roadster accelerates faster than most sports cars yet produces no emissions.
