Tesla Releases First Quarter 2016 Financial Results

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This is a quick cut of the main items from the shareholder letter outlining Tesla Q1 financial results:

Summary:

• Advancing 500,000 unit build plan by two years to 2018
• Volume Model 3 production and deliveries to start in late 2017
• Model S orders up 45% compared to Q1 last year, accelerating globally
• Model X production increased from 507 in Q4 to 2,659 in Q1
• Cash balance up $245M sequentially inclusive of ABL & exclusive of Model 3
• Affirming our plan to deliver 80,000 to 90,000 new vehicles in 2016.

Production
Given the demand for Model 3, Tesla has decided to advance its originally slated 2020 build out plan of 500k vehicles per year to 2018 – two years ahead of schedule. This will include a combined production of Model S, Model X, and Model 3. The company indicates that “additional capital” will likely be needed in order to meet its aggressive goal to 5x production within the next two years. Tesla Gigafactory will begin production of its first cells starting in the fourth quarter of this year.

Tesla also reached a new quarterly production record of 15,510 vehicles, up 10% from Q4. Q1 Model S production of 12,851 vehicles met plan, but Model X production of 2,659 vehicles fell short of projected deliveries.

Q1 Results

From the Tesla Q1 Shareholder Letter

Model S net orders rose 45% compared to a year ago.

Tesla Energy posted strong growth in the quarter as well. During Q1, we delivered over 25 MWh of energy storage to customers in four continents. We delivered over 2,500 Powerwalls and nearly 100 Powerpacks in the quarter throughout North America, Asia, Europe and Africa.

Total Q1 operating expenses were $417 million on a non- GAAP basis, down 3% from Q4.

We reduced capital expenditures by 47% from Q4 to $217 million, without compromising our future growth prospects. Q1 capital expenditures were primarily for increased production capacity, Gigafactory construction, and customer support infrastructure.

Cash and cash equivalents rose to $1.44 billion at quarter end aided by more effective cash management and $430 million drawn against our asset based credit line. The quarter end cash balance does not include any meaningful cash flow from Model 3 reservations. Cash flow from core operations was nearly breakeven. Automotive revenue was $1.48 billion on a non-GAAP basis.

During the quarter, we delivered 14,810 vehicles, almost the same as what we estimated in our April announcement. Q1 Automotive gross margin was 20.0% on a non- GAAP basis and 19.6% on a GAAP basis. Our Q1 non-GAAP net loss decreased 34% sequentially to $75 million, or $0.57 loss per share.

In Q2, we expect to produce about 20,000 vehicles, representing a sequential increase of nearly 30%, and will deliver as many of these cars as we can in Q2, with the rest being delivered in Q3. Q2 deliveries are expected to be approximately 17,000 vehicles.

Now that supply chain constraints have been resolved, we plan to exit Q2 at a steady production rate of 2,000 vehicles per week.

Given our plans to advance our 500,000 total unit build plan, essentially doubling the prior growth plan, we are re-evaluating our level of capital expenditures, but expect it will be about 50% higher than our previous guidance of $1.5 billion for 2016.