Tesla is out with its second quarter shareholder letter, and the automaker has confirmed that it broke ground outside of Reno at a possible Gigafactory location, but it's not saying if Nevada will actually house the new facility.
The letter details Tesla and Panasonic's formal partnership on the Gigafactory, with the battery supplier investing in equipment and Tesla providing land, buildings, and utilities. But Tesla isn't confirming that its construction site in Nevada is where the Gigafactory will be located.
In June, we broke ground just outside Reno, Nevada on a site that could potentially be the location for the Gigafactory. Consistent with our strategy to identify and break ground on multiple sites, we continue to evaluate other locations in Arizona, California, New Mexico and Texas. The final site for the first Gigafactory will be determined in the next few months, once we have full visibility and agreement on the relevant incentives and processes for enabling the Gigafactory to be fully operational to meet the timing for Model 3.
We don't get why Tesla would go to the trouble of securing land, breaking ground, and beginning construction without the intent of, y'know, actually building something at the site. But other states continue to woo Tesla and there's the possibility of multiple locations.
The Gigafactory is massively important to Tesla's growth. Without the additional battery capacity, it won't be able to keep up with projected demand, saying in the letter that, "Any potentially duplicative investments are minor compared to the revenue that could be lost if the launch of Model 3 were affected by any delays at our primary Gigafactory site."
And Model S demand is still increasing.
Model S orders, and thus demand, continue to grow even in our most established markets. In both North America and Europe, Q2 Model S orders increased sequentially at a much faster rate than for the rest of the automotive industry. Accordingly, we believe these markets remain under-penetrated.
As for the financial results, Tesla continues to issue both GAAP and non-GAAP information. Non-GAAP revenue was $858 million for the quarter, up 55% from last year, while GAAP revenue was $769 million. Net income was $16 million non-GAAP, but if you factory in those pesky Generally Accepted Accounting Principles, Tesla posted a $62 million loss for the quarter. And now it's doing business leasing, which will continue to widen that GAAP/non-GAAP margin.
Still, Tesla set another record with 7,579 delivers in Q2 and 8,763 cars built, including right-hand-drive models, and estimates 9,000 vehicles produced in Q3, which includes the two-week shutdown while it retools for both Model S and Model X production.
And speaking of the X, Tesla says it's still on track for a spring 2015 launch, with Alpha prototypes ready next week and Betas hitting roads later this year.
Tesla also says that they're tacking on an additional $100 million of investment for 2014, pegging total investment around $750-950 million for the year.
You can read the full letter below, and we'll be listening into Tesla's earnings call with investors later today.