• 5 minutes Mike Shellman's musings on "Cartoon of the Week"
  • 11 minutes Permian already crested the productivity bell curve - downward now to Tier 2 geological locations
  • 17 minutes WTI @ 67.50, charts show $62.50 next
  • 1 day The Discount Airline Model Is Coming for Europe’s Railways
  • 5 hours Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 13 hours Pakistan: "Heart" Of Terrorism and Global Threat
  • 6 mins Saudi Fund Wants to Take Tesla Private?
  • 2 days Newspaper Editorials Across U.S. Rebuke Trump For Attacks On Press
  • 56 mins Renewable Energy Could "Effectively Be Free" by 2030
  • 9 hours Starvation, horror in Venezuela
  • 18 hours Venezuela set to raise gasoline prices to international levels.
  • 2 days Batteries Could Be a Small Dotcom-Style Bubble
  • 12 hours Are Trump's steel tariffs working? Seems they are!
  • 1 day Scottish Battery ‘Breakthrough’ Could Charge Electric Cars In Seconds
  • 2 days France Will Close All Coal Fired Power Stations By 2021
  • 2 days Don't Expect Too Much: Despite a Soaring Economy, America's Annual Pay Increase Isn't Budging
Alt Text

Visualizing The Massive Impact Of EVs On Commodities

World market heavyweights such as…

Alt Text

Chinese EV Boom Could Crash Oil Prices

Most oil majors acknowledge that…

Jen Alic

Jen Alic

 

More Info

Trending Discussions

Tesla: ‘False Profits’ and a Bullish Market

Tesla: ‘False Profits’ and a Bullish Market

It’s been a great year for Tesla Motors Inc. (TSLA), which everyone’s eyeing for a takeover: the company’s stock is up 194% this year, it’s recorded its first ever quarterly profits, and it just paid off a government loan nine years early.

It’s even earned itself the moniker “America’s fourth automaker”. Shareholders are ecstatic and potential investors are increasingly bullish—but there’s another story here, if you dissect the financials.

So Tesla just released its Q1 2013 financials, showing its first profit: net income of $11 million on total revenues of $562 million. However, that profit was not on its core product—electric vehicles—but on its sale of emissions offset credits. It earned $68 million on the sale of Zero-Emission Vehicle credits, courtesy of the state of California, and $17 million on the sale of greenhouse gas emission credits.

It also had a couple more tricks up its sleeve, including $11 million in “earnings” from warrant liability reversals and $7 million through foreign currency adjustments.

This means its core business, which is the Model S all-electric luxury sport sedan. In fact, on this it lost upwards of $90 million, according to the Wall Street Journal, which seems to have it out for Tesla and the government’s loan largesse.

Related article: Is Tesla on Google's Shopping List?

Dissecting these financials is fair, but it’s not the only story here. While the investors seem to be overly bullish on Tesla with much thought for the real numbers behind the numbers, there have been some impressive achievements.

Last week, Tesla managed to pay off a $465 million government loan issued in 2010. Regardless of how it managed this, it’s impressive because it’s nine years early and because it removes a major hurdle for a takeover. 

And the market loves Tesla: It’s trading for over 800 times what its earnings are estimated for this year, and it’s valued at over $5 billion, according to Bloomberg.  Shares closed on 26 June at $105.72, up 3.24%. 

By the end of last year, Tesla had sold 2,450 of its electric sports car Roadsters that retail for $109,000; and it’s now started shipping the Model S sedan and is eyeing over 20,000 deliveries for this year, retailing at $69,900 a pop. It’s impressive, but still far from ‘mass’ marketing, and the prices aren’t for the faint of heart.

Related article: Tesla Makes a Recall for Certain Model S Vehicles

Is Tesla ripe for takeover? Probably not just yet. CEO Elon Musk, who owns a 24% share, should hold out for more and it’s too early for that—especially since we’re looking effectively at the most expensive automaker in the US with first-time ‘false profits’ that don’t reflect its core product.  But once it manages to prove itself through its financials—without resorting to emissions credit sales—the takeover will be big.

In the meantime, revenues are revenues, and money is money. The market likes Tesla, so we’re listening.

By. Jen Alic of Oilprice.com




Back to homepage

Trending Discussions


Leave a comment
  • SA Kiteman on June 29 2013 said:
    Jen, I think you are wrong. I think Tesla's core product IS the emissions credits. It jibes with his "Solar City" subsidies too.
  • David Hrivnak on June 30 2013 said:
    I believe you are wrong as Tesla's goal is sustainable transportation. A car that can run on cleaner and more plentiful fuels.
  • SA Kiteman on July 01 2013 said:
    Then why isn't he making ammonia fueled cars? Carbon free fuel that can be made with any source of electricity.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News