I can only imagine the challenges involved in ramping up production of an entirely new vehicle model, especially if that happens to be just the second vehicle model your company has designed from the ground up. As a long-term Tesla investor, I’m happy to get indication that challenges ramping Model X production seem to be overcome. By the end of Q2 2016, Tesla reports that it was consistently producing nearly 2,000 Model S and Model X oil saviors per week. (“Saviors” rather than “killers” since these electric vehicles help keep oil in the ground, safely away from the vehicles that want to burn it to death.)
Producing 2,000 vehicles a week in the 2nd half of 2016 would mean producing 52,000 SUVs and sedans in that time. However, Tesla aims to reach a steady production rate of 2,200 cars a week by the end of Q3, and 2,400 cars a week by the end of Q4. Confident Tesla will be able to achieve at the very least 2,000 cars per week, the company reiterated its 2H target. (Also note that many vehicles were produced but not yet delivered at the end of Q2.) With nearly 30,000 vehicles delivered in the first half of 2016 (14,820 in Q1 and 14,402 in Q2), that would put Tesla close to the lower end of its guidance of 80,000–90,000 deliveries in 2016. I’m hoping Tesla is aiming to get closer to 55,000 deliveries in 2016 rather than 50,000, but we’ll see where the cards land. [Note: you can view all Tesla quarterly reports and listen to the webcasts here.]
Another confirmation from Tesla’s Q2 2016 shareholder letter is that Model 3 design has been completed — pencils are down. Tesla also highlighted “old” (Q2) product news that many of us have already relegated to the history books, which is that it “rolled out the biggest aesthetic and functional update to Model S since its initial launch [and] introduced an upgradeable 60 kWh Model S.”
For some more number fun, here are three big updates:
- 18,345 vehicles produced in Q2 2016 set a new quarterly production record for Tesla Motors, an 18% increase over Q1 2016 and a 43% increase over Q2 2015.
- $1.7 billion in equity was raised, exiting the quarter with $3.25 billion in cash.
- Total vehicle orders (Model X and Model S) grew 67% in Q2 2016 versus Q2 2015.
- 9,764 Model S were delivered in Q2 2016.
- 4,638 Model X were delivered in Q2 2016.
- Model S is #1 in sales in North America and in Europe in the 4-door sedan category and its price class.
- Tesla plans “to add a new retail location every four days on average during the remainder of Q3 and through Q4.” (I think I’m going to highlight this in a separate article since it stimulates a story of its own.)
- “Total Q2 GAAP revenue was $1.3 billion, while non-GAAP revenue was $1.6 billion for the quarter, up 31% from a year ago. Total Q2 gross margin was 21.6% on a GAAP basis and 20.8% on a non-GAAP basis.”
- “Automotive revenue was $1.2 billion on a GAAP basis and $1.5 billion on a non-GAAP basis, which includes a $293 million net increase in deferred revenue and other long term liabilities resulting from lease accounting used for indirect leases issued through our bank partners and cars sold with an RVG.”
- “Model S average prices increased 3% sequentially, due to higher option take rates and the modest price increase associated with the Model S refresh.”
- “Model X average prices were more than 15% higher than for Model S, despite declining sequentially as mix shifted away from Signature Series variants.”
- “Q2 Automotive gross margin was 23.1% on a GAAP basis. On a non-GAAP basis, gross margin excluding ZEV credits increased over 200 basis points from Q1 to 21.9%.”
- Tesla expects automotive gross margin to increase 2–3% in Q3 and Q4.
- “Q2 Services and other revenue was $88 million, up 15% from a year ago but down sequentially. The decline was primarily due to having fewer pre-owned cars to sell because of the need to use them to expand our service loaner fleet. Q2 Service and other gross margin was 2.5%, down from 4.7% in Q1, but generally in line with our expectations.”
- “Total Q2 GAAP operating expenses were $513 million and included $61 million of non-cash stock-based compensation. After excluding non-cash stock based compensation, non-GAAP operating expenses were $452 million, up 8% from Q1.”
- “Non-GAAP sales, general and administrative expenses reflect careful expense management and would have been flat sequentially, except for a one-time payroll tax expense of $17 million associated with the exercise of CEO stock options that would have expired this year.”
- “Our Q2 GAAP net loss was $293 million or a $2.09 loss per share on 140 million basic shares, while our non-GAAP net loss was $150 million, or a $1.06 loss per basic share.”
- “Our GAAP cash flow from operations during the quarter was $150 million, which included the receipt of Model 3 deposits. After adding $143 million of cash inflows from vehicle sales to our bank leasing partners, our cash flow from core operations was nearly $293 million.”
- “During Q2, we invested $295 million in capital expenditures to increase production capacity, accelerate Gigafactory construction, and expand customer support infrastructure. Capital expenditures remain on plan to help us reach our goal of producing 500,000 vehicles in 2018.”
- “Total non-GAAP operating expenses should increase sequentially in Q3 and Q4, and we now expect full year 2016 total non-GAAP operating expenses to increase by about 30%. The increases come from engineering, design, and testing expenses related to Model 3 supplier contracts, and higher sales and service costs associated with expanding our geographic presence.”
- Tesla expects capital expenditures of ~$2.25 billion in 2016, largely in support of the hastened Model 3 production plans.
A few more highlights are coming in follow-up articles. Stay tuned.
Tesla (TSLA) stock was erratic in after-hours trading, but mostly down.
Photos by Kyle Field, for CleanTechnica