Tesla's Second Quarter Deliveries Surge 52%--2nd Update

By Mike Ramsey 

Tesla Motors Inc.'s second-quarter sales jumped 52%, higher than the company had forecast, giving the Silicon Valley auto maker important momentum ahead of the debut of its Model X sport-utility later this year.

Tesla's shares rose 2% to $274.75 in morning trading following the disclosure Thursday. Tesla sold 11,507 Model S sedans for the three months that ended June 30, a company record. The global sales results were better than the 10,000 to 11,000 forecast the company had given two months ago in its first quarter earnings release.

While most companies throughout the world are struggling to sell their electric cars in an environment with continued low fuel prices, Tesla has established that it is appealing to a different buyer than its competitors.

The company has been successful by offering a long-range electric car--up to 270 miles on a charge--compared with most other electric cars that are under 100 miles. In addition, the Model S can carry up to seven passengers, has sports car acceleration of 5 seconds to 60 MPH or less and has a 17-inch touch screen display that allows Web surfing. In addition, Tesla continues to add features to the car through software updates, something other car makers are only just beginning.

Tesla likely has become the biggest seller of electric vehicles in the U.S.--though the company's obscure sales reporting methods, which don't normally break out monthly or regional results, make it difficult to determine.

In June, Nissan Motor Co. sold 9,816 Leafs in the first six months of 2015 in the U.S. Meanwhile, Tesla sold 21,552 globally in that period. Tesla doesn't normally break out regional results, but more than half of its sales in 2014 were from the U.S. The Tesla, which starts at $76,000, is likely outselling the $28,500 Leaf.

Importantly, the higher-than-expected sales should benefit Tesla's financial results. In the first quarter, the company burned through more than $500 million in cash and its losses widened to $154 million.

The average Tesla sells for around $100,000 based on the company's financial reports. That means an additional 500 to 1,000 sales of Model S vehicles are the equivalent of $50 million to $100 million in revenues.

Tesla is expected to begin selling a sport-utility vehicle called the Model X in September. With thousands of reservations on hand, Tesla is expected to get a jolt in sales in the final quarter of the year.

Dan Galves, an equity analyst with Credit Suisse, correctly forecast the higher-than-expected sales in a note out earlier this week. He said the stock had "substantially more upside" and raised his price target to $325 from $290.

Write to Mike Ramsey at [e-mail]

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