Tesla just published its quarterly earnings and despite the crisis-shaken last part of Q1, the company reports a profit. It is the third consecutive quarter in which Tesla is in black, this time with 16 million dollars.
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Of course, this is a lot less than the profits of 105 and 143 million in the previous quarters. However, this GAAP net income sieved through revenues of $5.9Bn for Q1, a result Tesla deems its “highest ever revenue” when accounting for a seasonally slow first quarter. The total revenue grew 32% YoY. Compared to a generally strong Q4/2019, when Tesla recorded a revenue of $7.38 billion, Q1 is still solid enough. What appeared to help where the investments in production capacities and resulting strong sales that make the YoY perspective favourable over QoQ.
And this despite the Covid-19 pandemic – Tesla speaks of “operational challenges” and resulting “inefficiencies” here – plus, the plant in Fremont was only closed on 23 March shortly before the end of the quarter. The fact that no car has been built in Fremont since then is likely to have a particular impact on the second quarter: if the protective measures are indeed extended until June, the production shutdown in Fremont will affect two of the three months of the current quarter.
However, the earlier shift to the new Model Y in Fremont and also local Model 3 production in Shanghai work in Tesla’s favour for Q1, especially when looking at year-on-year growth. Production has increased as Tesla’s previously reported and unaudited numbers count 102,672 electric cars made this Q1 globally and across all models. This is 2% less than in Q1/2019 and an increase of 33% YoY at the same time. 87,282 of these were Model 3 and Model Y with the Model S and X constituting the remaining 15,390 units.
Deliveries took a hit with 88,496 accounting for a minus 21% QoQ. Still, the reports show a plus of 40% YoY. However, for Tesla to reach its projected target of global vehicle deliveries to “comfortably exceed 500,000 units” in 2020 has not come any closer. To reach it, Tesla would have to exceed its delivery record in each remaining quarter of this year.
While growing sales of the Model 3 lower the average selling price across the model range, further volume growth, especially in China resulted in a material improvement in margins of locally made Model 3 vehicles. The company reports an automotive gross margin of 25.5%, as well as total gross margin of 20.6%, meaning both reached their highest levels in 18 months.
The closure of factories, first in China and currently in the US, has however impacted Tesla’s cash flow mostly through sequential inventory growth. While Elon Musk managed to raise $2.3B capital just in February, it is offset by a negative quarterly free cash flow of $895M. Capital expenditures also increased due to investments in Model Y preparations in Fremont and Gigafactory Shanghai. Besides, Tesla is using the enforced production break to further increase its production capacity as reported.
However, it is unclear when Tesla will reopen its US facilities. The reopening was initially scheduled for 4 May but has since been in Jeopardy as reported.
In Grünheide, too, work for Giga Berlin continues, albeit on provisional permits. The state of Brandenburg recently stated that Tesla must revise the application for approval of its first Gigafactory in Europe. The company has now however officially paid te state of Brandenburg for the 300-hectare site.
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