Tesla plans to boost car production, picks Reno for possible Gigafactory
What’s interesting: Well, for starters, Tesla Motors’ second quarter shareholder letter included news that the company has already broken ground in Reno, Nev. for what could be the site of a planned $5 billion Gigafactory plant. The electric automaker revealed plans earlier this year for the 10 million square foot factory, which would be used to beef up Tesla’s lithium-ion battery production to make 500,000 vehicles a year by 2020. Until today, the location of the plant had been shrouded in mystery, though the shareholder letter by CEO Elon Musk and CFO Deepak Ahuja was careful to note that the company will continue to evaluate other factory locations in Arizona, California, New Mexico and Texas over the next few months. Cities are competing intensely to get the plant, which would create legions of high paying jobs. By considering several locations, Tesla can put more pressure on local officials to come up with more favorable financial incentives.
As Fortune already reported, Tesla (TSLA) actually announced earlier on Thursday that it has signed a deal to partner with Panasonic to build the Gigafactory, which the companies hope will produce more lithium-ion batteries annually within seven years than were produced worldwide last year. Should those hopes become reality, Tesla expects to eventually produce enough vehicles to take a bigger share of the worldwide auto market.
The numbers: Tesla posted a loss of $61.9 million in the second quarter, more than double what the company lost in last year’s second quarter, though it reported an adjusted profit of $16 million, which excludes certain expenses. Tesla reported a loss of 50 cents per share on $769 million in revenue, which is an increase of 89% year-over-year.
The Takeaway: Despite the sales increase, and the updates on the Gigafactory, Tesla’s second-quarter losses sent the company’s shares down slightly in after-hours trading after closing Thursday down 2.5%. Still, the company is in full-on expansion mode, estimating increased production for the remainder of 2014 as well as next year. After delivering 7,569 cars in the second quarter, Tesla says it is on track to deliver another 9,000 in the current quarter and more than 35,000 vehicles total for the year. That number is expected to grow to an annualized rate of 100,000 cars by the end of 2015. Tesla is also planning to step up its spending, increasing its prior guidance for investments for this year by $100 million to between $750 million and $950 million.