Record Q2 revenue paving way to profitability for Tesla
Tesla has released their business report for Q2 2018, and the numbers indicate that Tesla is heading towards being profitable quite soon. The revenue was at record levels for the company, but at the end of the day, Tesla is still in the red, albeit less so than at the end of the last quarter.
The numbers are specifically a record profit of 4 billion dollars between April and June. At the same time, the company also noted the largest loss, with 743 million dollars, which has steadily been increasing over time as well. The loss in Q4 of 2017 had been 675 million, followed by 709 million dollars in Q1 2018. As for the debt accrued by the company, the numbers are still in the red, however the growing revenue gives us the impression the Californians are heading for a “light red” some time soon: The profit grew from 3.3 to 3.4 to the current 4 billion dollars. CEO Elon Musk has also confirmed the plan to become profitable by the second half of this year, which looks increasingly likely now that Model 3 production has stabilized.
The EV manufacturer had made some serious effort to reach the ambitious 5,000 per week production goal for the Model 3 by the end of June, including the setup of a tent outside the Fremont factory with its own assembly line and flying in components from Grohmann instead of shipping them. In the middle of July, Tesla announced new targets: In Q3, they plan on producing between 50,000 and 55,000 vehicles, approaching production numbers of 6,000 per week by the end of this month, and hitting the 10,000 per week mark “as soon as possible”. Tesla realistically expects this mile-stone to be hit some time next year, for a number of reasons, including suppliers. The Gigafactory 1 only (!) reached a production rate 20 GWh per year at the end of July.
In terms of production numbers, Tesla managed to construct 53,339 vehicles during Q2. However, only 40,768 were delivered (22,319 Model X and S and 18,449 Model 3) A reason for the discrepancy between production and delivery was not noted by the company. It is not unlikely that Tesla is pushing deliveries back in order to extend the qualification for the tax rebate for another quarter. The 200,000 vehicle mark for deliveries was recently crossed.
Tesla’s future outlook is quite interesting, as usual: For Q3, the company announced that they would deliver more cars than they were producing, as well as increasing the profit margin on the Model 3 to 15%. During the past quarter, the margin stood at 3%. Tesla plans to increase the margin to 20% at the end of this year, due to steadily lowering production costs and an improved mix, according to the company.
Furthermore, Musk also added that they would not be acquiring market capital during the next quarter. At the end of July, the capital reserve was estimated to be around 2.2 billion dollars. A positive cash flow is also likely possible because no new expensive manufacturing lines have to be built anymore, as the planned production expansion can likely be completed with the existing lines. This alone can save up to a billion dollars.
This of course does not apply everywhere: The Chinese Gigafactory will cost the Californians around 5 billion dollars, as they plan to set up a complete production and assembly facility for both EVs and their respective batteries. The Tesla quarterly review stated that investment here will not begin until 2019.
Finally, a quick look at the Supercharger network: In the second quarter 103 locations with 1,308 charging stations were added. The 10,000 Supercharger mark was reached in early June, and currently there are more than 10,800 Superchargers and 19,200 destination chargers globally.
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