Tesla shows profit in Q2 despite Corona

Tesla has just released its Q2 earnings in a report and live webcast. The company was able to report the fourth sequential quarterly profit, despite the Corona crises, as well as an increase in cash. Tesla boss Elon Musk also revealed more details about the new site of the new Giga factory in Texas.

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In straight numbers, Tesla was able to record a $535 million increase in cash and cash equivalents in Q2 to $8.6 billion operating cash flow, $418 million in Q2, $327 million GAAP operating income (Generally Accepted Accounting Principles); 5.4% operating margin in Q2 $104 million GAAP net income; $451 million non-GAAP net income (ex-SBC) in Q2. The Californian company was able to register a fourth consecutive quarter of GAAP profitability – This makes the stock eligible to be considered for inclusion into the S&P 500, which broadens the pool of potential investors into Tesla’s stock.

“Our operating profit improved in Q2 despite challenging circumstances,” Tesla wrote in its earnings release today. “Positive impacts included lower operating costs due to a temporary reduction in employee compensation expense, a sequential increase in regulatory credit revenue and deferred revenue recognition of $48M related to a Full Self Driving (FSD) feature release.”

Concerning the upcoming self-driving technology, in the live webcast Musk said: “the self-driving tech will be profoundly better than people realise.” He went on to say that for all of the cars equipped with this technology “functionality should be ready by the end of this year, because I am literally driving it.” Musk considers “the overwhelmingly important thing is upgrading the fleet to self-driving” which will go represent the biggest asset changes.

Tesla said in their written report that “Autopilot & Full Self DrivingOur traffic light and stop sign recognition system is becoming more robust as we continue to collect more data from our customers driving through intersections. As of Q2, our FSD-equipped cars will either stop at an intersection or drive through it without driver confirmation when it is deemed safe to do so.”

Clearly very enthusiastic about the self-driving technology, Musk estimated “By far the overwhelmingly important thing is upgrading the fleet to self-driving” which, he said “will go to the biggest asset changes.” He gave something of a disclaimer saying that this depends on “when it happens and depending on local regulatory allowances.” Musk said that the self-driving ability will bring a “Higher utility value from 25 hours of use to something like 60.”

According to the Californian company, apart from self-driving technology and increase in range for the Model S (to 402 miles / according to EPA), the company’s most significant developments this quarter lay in the ongoing expansion and building of three new factories. In the live webcast, Musk said: “In 12-18 months we will have 3 new factories in place.”

Elon Musk revealed that the next Giga factory will be built in Texas right near Austin, five minutes from the airport and 25 minutes drive from the centre of town. Just last month we reported that Texas was offering significant subsidies for the Californian company that was still undecided about the location for its new US-American factory. Musk said in the live webcast that GigaTexas has a site of about 2000 acres right on the Colorado River. The factory will be open to the public and is “basically going to be an ecological paradise” said Musk.

At GigaTexas the Cyber truck, the Tesla Semi, the new Roadster and the Model Y will be produced. “And of course there is Factory Day coming up soon and it will surprise people how much there is to see.” Musk said that Tesla’s Roadrunner battery project will be located in Fremont. The keywords here are capacity expansion and more local production: In Fremont, the production rate of Model 3 and Model Y together is to increase from 400,000 to 500,000 units per year this year.

Another significant milestone in the first half-year was the increased Model S range to 402 miles (EPA). Regarding new vehicle projects, Musk said that “It would reasonable to assume we will make a compact vehicle at some point, but there is a long way to go with 3 and Y and Cyber truck and Semi.” Famous for his use of superlatives, Musk said: “I’ve never been more excited or optimistic about the company in the history of the company”

Tesla shares broke through the USD 1,000 mark for the first time in June this year. At over 180 billion dollars, this exceeded Toyota’s market capitalisation for the first time. This means that Tesla is currently trading on the stock exchange as the most valuable car manufacturer in the world.

Despite the Corona crisis, Tesla managed to grow deliveries in the first half of this year. Regarding deliveries, about which the stats were revealed at the beginning of this month, Tesla delivered a total of 90,650 vehicles in the second quarter of 2020, 2,250 more than in the first quarter of the year. From April to June a total of 82,272 Tesla vehicles were produced, which significantly fewer than in the 1st quarter due to Corona restrictions.

Update 24 July 2020: After Elon Musk had confirmed in the context of the announcement of the latest quarterly figures that Tesla’s next US plant will be built in Austin, Texas, it is now clear that more models will be built there than originally known: While at first only the Cybertruck and the Model Y were mentioned for customers on the US East Coast, Musk now declared that not only the electric truck Tesla Semi will be produced there, but also the Model 3 for the eastern half of North America.

As stated above, Musk had announced that the semi would be produced at the new Giga Texas factory in the company’s webcast. This may have come as a surprise to many – a separate plant would have been conceivable because of the different requirements of an electric truck. Tesla apparently wants to use the first semi built in Texas for its own purposes, as Jerome Gullien, president of Tesla’s auto division and responsible for the semi program, said: “I want to be clear that the first few units, we will use ourselves, Tesla, to carry our own freight, probably mostly between Fremont and Reno, which is a fantastic test route. We’re going to prove that we have very good reliability.”

Tesla.com (pdf quarterly earnings statement) and Tesla webcast, electrek.co, teslarati.com (both update)