Investor's Corner
Tesla Q1 2018 Earnings: $785M cash burned, $3.4B Revenue, Model 3 in focus
Tesla’s first-quarter earnings for 2018 saw the California-based carmaker beat Wall Street revenue estimates after posting $3.4 billion in revenue and beating earnings estimates with a loss of $568 million.
The results, which were posted in an update letter to investors after the closing bell on Wednesday, May 2, showed first-quarter earnings of -$3.35 per share, beating analyst estimates of -$3.58 per share. Revenue was $3.4 billion versus an estimate of $3.22 billion.
Revenue and Operating Losses
The company’s revenue for the first quarter consisted of $2.74B in automotive revenue and $410M from their energy and battery storage division. Automotive revenue saw an increase of 19.4% compared to the same period last year. The energy and battery storage division nearly doubled revenue with an increase of 91.6% compared to the same period last year. Overall, total revenue was up 26.4% year-on-year.
Automotive revenue slightly increased by 1.2% compared Q4 2017, while energy generation and storage increased significantly by 37.5%. Tesla deployed 76 MW of energy generation and 373 MWh of energy storage products in the first quarter as well.
Tesla posted operating losses of $563 million in the first quarter, primarily due to the ongoing ramp of the Model 3. On a per-share basis, the company posted a loss of $3.35 per share.
Model 3
Tesla was able to deliver 8,182 Model 3 vehicles during the first quarter of 2018. During the quarter the company produced 9,766 Model 3’s. The company’s Q1 2018 Update Letter maintained the company’s expectations of hitting the 5,000 a week production goal for the Model 3.
“After achieving a production rate of 5,000 per week, we will begin offering new options such as all-wheel-drive and the base model with a standard-sized battery pack,” Tesla stated in the letter.
The company reported that net Model 3 reservations are still above 450,000. Less than 20 Tesla stores have the Model 3 on display, and the company plans to deploy more Model 3’s to other stores.
Tesla Energy
Tesla did not state how much revenue the massive 129MWh South Australia project generated, stating, “substantial growth of our energy storage deployments and recognition of our large project in South Australia.”
Energy Storage and Generation generated $410 million worth of revenue for the company. The numbers are representative of Tesla Energy’s organic growth since the company acquired SolarCity back in 2016.
Earnings Highlights
- Tesla streamlined Model 3 battery pack production time by 96%, says Elon Musk
- Tesla explains oversight on Model 3 production line automation
“Electric utilities and power producers around the globe are increasingly appreciating the value proposition of our Powerpack storage systems based not only on economic benefits but also on the operational benefits of faster response time and greater reliability of the electric grid. In addition, we deployed a record number of residential Powerwall systems in Q1. In spite of the significant growth of Powerwall deliveries, our backlog in Q1 continued to grow,” Tesla stated in the quarterly letter.
Guidance for the end of 2018
Tesla expects to deliver 100,000 Model S and X vehicles for 2018. The company also reiterated its goal of producing 5,000 Model 3 per week by the end of the second quarter. Tesla did not disclose an overall production target for the Model 3 in 2018.
Tesla also expects its Energy products to start generating more revenue, in light of more battery storage projects and the start of residential installations of Solar Roof tiles. The company also expects to see revenue from its Supercharger network, due to the increasing number of Model 3 using the charging facilities.
Tesla has just over $2.67 billion in cash at the end of the quarter, down from $3.37 billion in the previous quarter.
Today’s trading session ended with TSLA closing up 0.41% at $301.15. After-hours, the stock was trading up nearly another 2%.
Tesla’s full Q1 2018 Update Letter can be accessed here.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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