27 Mar

JAT Capital Lowers Stake in Tesla Motors

WRITTEN BY Santiago Solari

JAT Capital and Tesla Motors

In the fourth quarter of 2014, JAT Capital reduced its stake in Tesla Motors (TSLA) to 684,456 shares from 984,778 shares. The position accounted for 5.83% of the fund’s 4Q14 portfolio.

Overview of Tesla Motors

Tesla Motors designs, develops, manufactures, and sells electric vehicles, electric vehicle powertrain components, and stationary energy storage systems. The company generates approximately $3.19 billion in revenues annually.

TSLA operates in four segments on the basis of geography:

  • United States
  • China
  • Norway
  • Other

The United States segment accounts for 47% of revenues, while the China, Norway, and Other segments bring in 15%, 13%, and 25% of revenues, respectively.

At present, TSLA is selling its second vehicle, the Model S sedan. Tesla has sold 57,000 Model S sedan units since the car’s introduction in June 2012.

Here are some of Tesla’s primary competitors in the large luxury vehicles market:

  • Daimler (DAI), which owns the Mercedes-Benz brand
  • Toyota (TM), which owns the Lexus brand
  • BMW Group (BMW)
  • Volkswagen (VOW), which owns the Audi and Porsche brands

JAT Capital Lowers Stake in Tesla Motors

TSLA makes up 0.51% of the PowerShares QQQ Trust (QQQ). The company also accounts for 0.89% of the iShares US Consumer Goods ETF (IYK).

Widening net loss

Tesla experienced revenue growth of 55.5% year-over-year (or YoY) to $957 million in 4Q14 due to increased orders. Despite the growth in revenues, Tesla booked a 4Q14 net loss of $108 million versus a net loss of $16 million in 4Q13. The increase in net loss was primarily due to lower-than-expected average selling prices, higher costs for goods sold, and higher operating expenses associated with opening new service and sales locations.

Capacity expansion plans

In order to be well-positioned for the proposed launch of Model X in the later half of 2015, Tesla has initiated several expansion projects.

The company began to enlarge its Fremont facility to include a paint shop that will accommodate Model S and Model X vehicles. The shop will provide paint services of high volume and quality while keeping costs low.

Tesla also announced that it was installing state-of-the-art machinery at the Lathrop manufacturing facility. This machinery will provide the necessary components for manufacturing electric vehicles.

Plus, Tesla has partnered with Panasonic to set up the Gigafactory, a large-scale battery manufacturing facility near Reno. The project is proceeding according to plan, so the companies are expecting battery pack production to commence in 2016.

In the next article, we’ll discuss JAT Capital’s decreased position in FleetCor Technologies (FLT).

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