Tesla’s owes it’s first-quarter revenue growth— reported last week — largely to an accounting change the automaker instituted at the start of 2018.
The change makes contributed to a $299 million increase in auto-sales revenue, the filing shows.
Tesla had auto sales of $2.561 billion in the first quarter, 26% higher than the $2.035 billion it logged in the first quarter of 2017. But back out the accounting change and the increase is closer to 11%. The accounting change also lowered the total revenue generated from leasing, by about $165 million.
“We have adopted the new revenue recognition standard ASC 606 effective January 1, 2018,” Tesla said in a quarterly filing with the SEC on Monday.
“This impacts the way we account for vehicle sales with a resale value guarantee and vehicles leased through our leasing partners, which now generally qualify to be accounted for as sales with a right of return,” reads Monday’s filing. “In addition, for certain vehicles sales with a resale value guarantee and vehicles leased through leasing partners prior to 2018, we have ceased recognizing lease revenue starting in 2018 and now record the associated cumulative adjustment to equity under the modified retrospective approach.”
The new accounting method, which was effective for all companies under US law after December 15, 2017, essentially allows the company to count the revenue for a car sold via a lease immediately, rather than monthly as payments are made. It also allows investors to compare auto sales revenue for old-guard automakers like Ford and GM who sell their cars to independently-owned dealerships, to Tesla, which sells its cars directly to consumers and uses outside leasing partners.
Tesla ended its “resale value guarantee” program in 2016. The scheme previously guaranteed Tesla buyers half of what they paid for their car, plus 43% of any add-on options, like larger batteries.
Investors don’t seem to be bothered by the amended filings, and Tesla’s stock was up 3.88% in trading at midday.
Shares of Tesla have fallen by 5% since the beginning of 2018, as a f atal crash and resulting NTSB investigation, plunging bond prices, and questions surrounding its promise to not raise any additional capital this year weigh on the stock
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