Tesla Q2: records broken and $5 billion in cash


In the second financial quarter of 2019, Tesla has produced 87,048 cars and delivered 95,356, surpassing all previous quarterly figures and enabling a similarly record-breaking cash flow. CTO, JB Straubel is stepping down after 15 years with the company.

Despite fears recently that the Californian company may miss its targets, it seems Tesla has overcome its global logistics and delivery challenges to register exponential growth and record production and delivery numbers.

However, Tesla has experienced below-expectation earnings with a loss of $1.12 per share (Non-GAAP), while revenue came out much as expected with the company making  $6,349 billion in revenue. On the even more superlative side, the Californian company says that the free cash flow of $614 million generated is the highest in the history of the company, which, including Tesla’s public offering of equity and convertible bonds, amounts to $5 billion in cash and cash equivalents. This enables Tesla quite a comfortable position as they prepare to launch Model 3 production in China and Model Y production in the US.

These high production and delivery numbers are, as expected, largely thanks to Model 3, which was delivered 77,634 times across the globe. In fact, Model 3 outsold both its electric and combustion engine equivalents as well as gaining traction in other markets. The Californian company continues to disrupt as European sales now approach the levels enjoyed by established competitors. As in the last quarter, Tesla has registered that more than 60% of customers are willing to trade in non-premium brands for Model 3, which continues to exceed market expectations.

Despite being able to reduce the price of the Model 3, the majority of Model 3 orders were for the more expensive long-range battery option. Production of the Model 3 has also gone well this quarter with a monthly record in both May and June. Currently, Tesla says that their Fremont plant can produce 7,000 Model 3 each week and aim to be able to produce 10,000 units per week of all models combined by the end of 2019.

In the live Q2 report webcast, Musk says “It’s kind of a crazy thing to consider that Tesla is almost doubling all cumulative production every year. This is a totally mad thing – to make as many cars in a year as we’ve made in our entire history.”

Models S and X were produced at similar numbers to Q1 with 14,517 units, which is down around 10,000 units from the same period last year, thanks to the release of the Model 3. Also in the second quarter of this year, Tesla added 101 vehicles to their Mobile Service fleet and opened 25 new store and service locations. This means that the customer fleet size has doubled in the past 12 months. Worldwide, Supercharger capacity has grown to roughly 1,600 charging locations.

Regarding the company’s profitability, in the webcast about the company’s Q2 results, Musk says that “Tesla is now at the point of being self-funding.” He reports that profits for Q2 were “around break-even,” claiming that these will be profitable next quarter. “I feel pretty confident about that,” he says.

In the live webcast, Tesla’s chief technology officer, JB Straubel also announced that he is stepping down after years with the company in what appeared to be a very warm atmosphere. He said that while he is “not disappearing” he will step down from his executive position insisting, “I love the company and the team.” Musk said that if he hadn’t had lunch with Straubel in 2003 “the company wouldn’t exist, basically.” Drew Baglino, Vice president of technology will be holding the CTO position for the time being.

China calling: By the end of this year, Tesla’s Gigafactory in Shanghai should start production. In Q2 the Californians started moving machinery into the plant for the first phase of production. The simplified and less-expensive Model 3 version should be produced at a rate of 150,000 units per year there, claims the company. Tesla is targeting production of over 500,000 vehicles in the next 12 months. Musk said, “We have to finalise the location for our European Gigafactory before the end of the year.”

Next up: Model Y. At their production plant in Fremont, Tesla began preparations for Model Y production over this last quarter. With their capacity to leverage existing manufacturing designs in the development of Model Y production facilities, Tesla claims that their new Model Y will be even more profitable than the Model 3. The company expects that the model’s success will also be due to a large market size for SUVs. Musk said that the Model Y will be considerably easier to make since “roughly three-quarters of all parts are common between Model 3 and Model Y.”

In Tesla’s Q2 webcast report, Tesla CFO Zach Kirchorn summarises by saying, “Our intention is to grow and advance as fast as we can.”

tesla.com, tesla.com (pdf) and via live webcast.


about „Tesla Q2: records broken and $5 billion in cash“

Leave a Reply

Your email address will not be published. Required fields are marked *