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Tesla releases Q2 results: Sets quarterly production record

Published

9 years ago

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This is a quick cut of the main items from the shareholder letter outlining Tesla Q2 financial results:

Summary

  • Completed Model 3 design phase
  • Increased automotive gross margin on both Model S and Model X
  • Exited Q2 consistently producing nearly 2,000 vehicles/week
  • Production and demand on track to support 50,000 deliveries in 2H 2016
  • Merger agreement to acquire SolarCity signed, subject to shareholder vote

Production

“In Q2, we delivered 14,402 new vehicles consisting of 9,764 Model S and 4,638 Model X, which was slightly higher than what we stated in our July announcement. Model S remains the market share leader in North America and Europe among all comparably priced four-door sedans, and Model X is quickly gaining ground against similarly priced SUVs in all regions.”

“We exited Q2 consistently producing nearly 2,000 vehicles per week and our total Q2 production of 18,345 vehicles constituted a new quarterly production record, up 18% from Q1 and up 43% from Q2 last year.”

These numbers are in line with the 14,370 new vehicles deliveries and the “just under 2,000 vehicles per week”  reported in the July 3rd release. So nothing new here.

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One good number is that “production hours per vehicle also declined throughout the quarter for both cars”, indicating the ability to continue to produce more cars per hour.

Gigafactory

“Gigafactory construction remains on target to support volume production of Model 3 in late 2017, and we recently accelerated construction to reach a rate of 35 GWh/year of cell production in 2018. This will allow us to meet the needs of our accelerated Model 3 production plan.”

Notice that the 35GWh/year of cell production is currently the total worldwide output.

Earnings

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“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. Both figures include a $0.05 per basic share loss related mostly to losses from foreign currency transactions.”

According to MarketWatch, “Analysts polled by FactSet [expected] Tesla to report an adjusted loss of 59 cents a share in the second quarter. […] Estimize, which crowdsources estimates from analysts, fund managers, and academics, expected Tesla to report a loss of 54 cents a share, based on 379 estimates.”.

Loss is higher than anticipated. This number scared a few traders that bid the stock lower to 217 in after hours trading, but the stock quickly retraced back to 228, higher than the daily close. For a company like Tesla, where the price is based on future expectations, the earning numbers are really not what counts.

Revenue

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.

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Also according to MarketWatch, “FactSet analysts [were] expecting sales to reach $1.63 billion in the quarter, compared with $1.20 billion in the second quarter of 2015. […] Estimize [was] expecting sales of $1.55 billion.”

Revenue is pretty much matching expectations, and this will be seen positively by Wall Street.

Gross Margins

“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%. We recognized an insignificant amount of ZEV credit revenue in Q2. The strong sequential gross margin increase was primarily due to improved manufacturing for Model X and favorable pricing for Model S. Our warranty accrual rates on new vehicles were generally consistent with Q1.”

Another good number that Wall Street likes a lot: increasing gross margins!

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“We delivered fewer cars in Q2 than originally planned as a result of our steep production ramp, which resulted in almost half of Q2 production occurring in the final four weeks of the quarter. Given inflection points in the production ramp and firm shipping cutoffs, shifting production by even a short period of time had a disproportionate impact on the number of cars that were delivered by quarter end.”

This is also nothing new as it was originally disclosed in the July 3rd release.

Services

“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.”

Stores

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“We are also accelerating store openings and plan to add a new retail location every four days on average during the remainder of Q3 and through Q4. We are adding stores in new population-dense markets like Taipei, Seoul, and Mexico City, while also adding stores in our most mature markets like California.”

That is about 45 new stores by the end of the year.

Outlook

“Production and demand are on track to support deliveries of approximately 50,000 new Model S and Model X vehicles during the second half of 2016.”

Given the Q1 and Q2 reported deliveries, the 2016 deliveries are now slated to be around 79,000, pretty close to the bottom of the previously reported 80,000 to 90,000 range.

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“Vehicle production efficiency is improving rapidly and we are now increasing our weekly production rate even further. Barring any further supply constraints, we plan to exit Q3 with a steady production rate of 2,200 vehicles per week, and plan to increase production to 2,400 vehicles per week in Q4.”

“Despite the disciplined pace of capital spending in the first half of this year, we still expect to invest about $2.25 billion in capital expenditures in 2016, in support of our accelerated production plan for Model 3.”

What is not there

Surprisingly there is nothing in the letter about the pending $2.6 billion SolarCity acquisition.

Full Q2 Results

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From the Tesla Q2 Shareholder Letter.

Initial Market Reaction

$TSLA stock immediately dropped to $217 right after the close of regular market trading, but after about an hour of extended hours trading it was back to the previous daily close of $225.30, indicating that we should not expect much fireworks when the stock market reopens on Thursday.

Wall Street seems relieved that the weekly production numbers are in line with expectations, and that the corresponding “production ramp” is still in play.

 

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Elon Musk

Twitter co-founder Jack Dorsey endorses Elon Musk Tesla pay package

Dorsey framed the pay package as an engineering and governance crossroads for Tesla.

Published

2 days ago

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November 6, 2025

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Twitter co-founder and Square CEO Jack Dorsey has publicly backed Elon Musk’s leadership ahead of Tesla’s pivotal shareholder vote, which is expected to be decided later today at the company’s 2025 annual meeting. 

Dorsey framed the pay package as an engineering and governance crossroads for Tesla.

Dorsey’s public nod framed as an engineering defense of Musk

In a post on X, Dorsey weighed in on Tesla’s post about being in a “critical inflection point.” As per the Twitter-co-founder, the vote on Musk’s 2025 performance award is not about compensation. Instead, it’s about ensuring the path for the company’s engineering in the coming years. 

“This is not about compensation. it’s about ensuring a principled (and exciting!) engineering approach to the company’s future,” Dorsey wrote on his post, later stating that users of Cash app with TSLA shares would be able to vote for the CEO’s proposed 2025 performance award. 

Elon Musk appreciated Dorsey’s endorsement, responding to the Twitter co-founder’s post with a heart emoji. Musk has been pretty thankful for the support for is fellow tech executives, also thanking Michael Dell recently, who also advocated for its proposed 2025 performance award.

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Musk’s support

While Elon Musk’s 2025 performance award has received opposition from proxy advisors such as Glass Lewis and ISS, it has received quite a lot of support from longtime bulls such as ARK Invest, and, more recently, Schwab Asset Management following calls from TSLA retail shareholders. 

“Schwab Asset Management’s approach to voting on proxy matters is thorough and deliberate. We utilize a structured process that focuses on protecting and promoting shareholder value. We apply our own internal guidelines and do not rely on recommendations from Glass Lewis or ISS. In accordance with this process, Schwab Asset Management intends to vote in favor of the 2025 CEO performance award proposal. We firmly believe that supporting this proposal aligns both management and shareholder interests, ensuring the best outcome for all parties involved,” Charles Schwab told Teslarati.

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Elon Musk

Tesla Robotaxi and autonomy dreams lean on shareholders: Wedbush

Published

3 days ago

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November 5, 2025

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Credit: Tesla Europe & Middle East/X

Tesla’s dreams of developing a Robotaxi suite that utilizes a fully autonomous platform developed by the company’s top-tier talent now lean on shareholders and perhaps the most crucial vote in its history.

That’s what Dan Ives of Wedbush said in a new note to investors on Wednesday. As the Annual Shareholders’ Meeting is now just one day away, investors are down to their final chance to vote for or against Elon Musk’s new compensation plan.

Ives wrote that, while the company has made its intentions clear, wanting to maintain Musk, pay him accordingly, and give him the voting power he has long wanted, ultimately, the responsibility falls on investors.

As many retail shareholders have pushed for people to vote for Musk’s compensation package, there are a handful of large-scale funds and firms that have decided to go in another direction. Bullish Wall Street firms, Wedbush being one of them, believe it is crucial for Tesla to maintain Musk.

The vote could have major implications on whether Tesla launches an autonomous Robotaxi suite in the near future, Ives says:

“Getting Musk’s pay package approved tomorrow at the highly anticipated meeting will be a big step towards advancing Tesla’s future goals with the autonomous and Robotaxi roadmap ahead.”

While some investors are convinced the company is ready to go in a different direction simply based on Musk’s political involvement over the past year, many investors are under the impression that the development of Tesla’s autonomy suite, as well as its prowess in the EV sector, would fall if Elon were not at the helm.

Tesla’s Board of Directors has already stated that they have received confirmation that Musk’s political involvement would wind down in a timely manner. Moving forward, his focus will not veer from the mission of any of his companies; at least that’s what can be gathered from some of the Board’s communications over the past month.

Musk’s new compensation package is incentivized by performance metrics and will require him to achieve a handful of lofty tranches. He will not get paid unless he drives shareholder value, which is something many skeptics tend to leave out.

Ives continues:

“This new incentive-driven pay package for Musk would also provide an additional 423 million shares of common stock (~12% of shares), which would increase his ownership of Tesla up to ~25% voting power, which we believe was critical to keep Musk at the helm to lead Tesla through the most critical time in the company’s history. We believe this was the smart move by the Board to lay out these incentives/pay package at this key time as the biggest asset for Tesla is Musk…and with the AI Revolution, this is a crucial time for Tesla ahead with autonomous and robotics front and center.”

Wedbush maintained its Outperform rating and $600 price target on shares.

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Elon Musk

UPDATE: Tesla investors push Charles Schwab for Musk comp plan clarification

Published

4 days ago

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November 4, 2025

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tesla cybertruck elon musk
Tesla CEO Elon Musk unveils futuristic Cybertruck in Los Angeles, Nov. 21, 2019 (Photo: Teslarati)

Update: 4:00 p.m. EDT – Charles Schwab has reached out to TESLARATI with the following statement, clarifying that it plans to vote FOR Musk’s compensation package:

“Schwab Asset Management’s approach to voting on proxy matters is thorough and deliberate. We utilize a structured process that focuses on protecting and promoting shareholder value. We apply our own internal guidelines and do not rely on recommendations from Glass Lewis or ISS. In accordance with this process, Schwab Asset Management intends to vote in favor of the 2025 CEO performance award proposal. We firmly believe that supporting this proposal aligns both management and shareholder interests, ensuring the best outcome for all parties involved.”
There have also been updates to the headline and various paragraphs to reflect this as well as accuracy.

Tesla investors are pushing Charles Schwab for clarification after it was expected to vote against CEO Elon Musk’s pay package.

Several high-profile Tesla influencers are speaking out against Charles Schwab, saying its decision to vote against the plan that would retain Musk as CEO and give him potentially more voting power if he can achieve the tranches set by the company’s Board of Directors.

The Tesla community appeared to see that Schwab is one firm that tends to vote against Musk’s compensation plans, as they also voted against the CEO’s 2018 pay package, which was passed by shareholders but then denied by a Delaware Chancery Court.

Schwab’s move was recognized by investors within the Tesla community and now they are speaking out about it:

At least six of Charles Schwab’s ETFs were expected to vote against Tesla’s Board recommendation to support the compensation plan for Musk. The six ETFs represent around 7 million Tesla $TSLA shares.

Jason DeBolt, an all-in Tesla shareholder, summarized the firm’s decision really well:

“As a custodian of ETF shares, your fiduciary duty is to vote in shareholders’ best interests. For a board that has delivered extraordinary returns, voting against their recommendations doesn’t align with retail investors, Tesla employees, or the leadership we invested to support. If Schwab’s proxy voting policies don’t reflect shareholder interests, my followers and I will move our collective tens of millions in $TSLA shares (or possibly hundreds of millions) to a broker that does, via account transfer as soon as this week.”
Tesla shareholders will vote on Musk’s pay package on Thursday at the Annual Shareholders Meeting in Austin, Texas.

It seems more likely than not that it will pass, but investors have made it clear they want a decisive victory, as it could clear the path for any issues with shareholder lawsuits in the future, as it did with Musk’s past pay package.

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