Tesla aims full year 2016 non-GAAP profitability
Palo Alto - US-based electric automobile manufacturer Tesla Motors has announced its Q4 and full year 2015 financial report.
Automotive revenue in Q4 was $1.65 billion on a non-GAAP basis, and comprised GAAP Automotive revenue of $1.12 billion plus a net increase of $533 million related to cars with a resale value guarantee or collateralized borrowing and subject to lease accounting. Tesla delivered 17,478 vehicles in Q4, including 206 Model X vehicles. Tesla directly leased 881 cars to customers in Q4, about the same percentage as last quarter and worth $85 million of aggregate transaction value. As expected, Model S average transaction price declined by about 2% due to vehicle and option mix. Price increases outside the U.S. offset the impact of unfavorable movements in foreign currencies during the quarter.
Q4 Automotive gross margin, excluding $8 million of ZEV credit revenue, was 20.9% on a non-GAAP basis and 19.2% on a GAAP basis. These margin measures were burdened by $67 million non-GAAP ($51 million GAAP) of unfavorable labor and overhead allocations associated with lower than planned Model X production volume, and non-recurring asset impairment charges for obsolete painting equipment and Model S components as the company transitioned to improved production processes and designs. Excluding these items, Q4 Automotive gross margin was 25.0% on a non-GAAP basis and 23.7% on a GAAP basis. This represented sequential improvement, despite a decline in average transaction price in Q4. Q4 GAAP operating expenses were $479 million and included $50 million of non-cash stock based compensation. Our non-GAAP operating expenses in Q4 were higher than expected at $429 million, up 18% from Q3.
Teslas Q4 non-GAAP net loss was $114 million, or $0.87 per share, and our Q4 GAAP net loss was $320 million or a loss of $2.44 per share, both based on 131 million basic shares. For full year 2015, our net loss was $2.30 per share on a non-GAAP basis and a loss of $6.93 per share on a GAAP basis, both based on 128 million basic shares.
Teslas Q4 earnings per share figures both include a $17 million loss, or $0.13 per basic share, related mostly to unrealized losses from foreign currency revaluation.
Cash and cash equivalents were $1.2 billion at the end of the quarter. Capital expenditures during the quarter were $411 million, and $1.6 billion for the full year. Capital expenditures were primarily for the capacity expansion and tooling associated with Model X, construction of the Gigafactory, and expansion of service centers, retail locations and the Supercharger network.
Teslas GAAP cash outflow from operations during the quarter was $30 million. Operationally, this cash flow is offset by $209 million of cash from vehicle sales to our leasing partners but classified in the financing section of our statement of cash flows. Adjusting for the classification of these cash flows, our core operations generated $179 million of positive cash flow in Q4, and $44 million for the full year.
Tesla plans to use our leasing partners as the primary funding source for our indirect leasing activities during 2016. We also expect to draw on our asset-based line to support leases funded directly by Tesla and the expected growth in our finished goods inventory. During Q4, Tesla used the asset-based financing line to pay off a more expensive third party warehouse loan facility, resulting in drawings on the asset-based line of $135 million at the end of the quarter. To support these activities, Tesla recently expanded our asset-based line to $1 billion.
Tesla expects to generate positive net cash flow and achieve non-GAAP profitability for the full-year 2016. Thus the cash balance at the end of 2016 should increase from the year end 2015 level. Tesla plans to fund about $1.5 billion in capital expenditures without accessing any outside capital other than our existing sources that support our leasing and finished goods inventory. The company plans to invest in equipment to support cell production at the Gigafactory, begin installation of Model 3 vehicle production machinery, open about 80 retail locations and service centers, and energize about 300 new Supercharger locations.
To achieve these goals Tesla plans to deliver 80,000 to 90,000 new Model S and Model X vehicles in 2016, representing accelerating growth over 2015 at the midpoint of the range. Tesla expects an average vehicle transaction price to increase slightly during 2016, as Model X grows to become a larger share of our deliveries throughout the year. In Q1, the company plans to grow deliveries 60% year on year to approximately 16,000 vehicles, and Tesla plans to directly lease about the same percentage of cars as the company did in Q4.
Throughout the rest of 2016, Automotive gross margin should continue to increase, helped by cost reductions for Model S and improving margin on Model X as the manufacturing efficiency improves for that vehicle. By year-end, Model S gross margin should begin to approach 30% and Model X gross margin should be about 25%, with continued improvement for Model X in 2017. Q1 operating expenses should increase just slightly from Q4 as Tesla intends to sharpen the focus on expense management. Then as development work continues on Model 3 and as Tesla expands to support growth, operating expenses should increase throughout 2016, so that for the full year total operating expenses should increase by about 20%. Achieving these results in 2016 should leave the company well positioned for 2017, when Tesla plans to launch Model 3 and take another significant step towards the company
Source: IWR Online, 11 Feb 2016
