Investor's Corner
Tesla releases Q2 results: Sets quarterly production record
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.
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
“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.
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!
“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
“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.
“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
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.
Investor's Corner
Tesla just did something in South Korea that no foreign carmaker has ever done
Tesla’s Model Y just became South Korea’s best-selling car, beating every domestic model in May.
Tesla did something last month that no foreign car has ever done in South Korea by outselling every vehicle in the country, domestic or imported, finishing the month with Model Y as the single best-selling car across the entire Korean market. According to data from the Korea Automobile Importers and Distributors Association released on June 4, the Model Y recorded 8,762 units sold in May, pushing the Kia Sorento into second place at 7,836 units and the Hyundai Grandeur into third at 5,183 units. It is the first time an imported vehicle has outsold every domestic model on a single-month basis.
Tesla imported 10,866 cars into South Korea in May, making it the top import brand for the fourth consecutive month. BMW followed at 6,555 units, less than two-thirds of Tesla’s total, while BYD registered just 1,032 units. The combined domestic sales of GM Korea, Renault Korea, and KG Mobility last month totaled just 7,019 units, meaning a single Tesla model outsold three Korean automakers combined.
Tesla FSD earns high praise in South Korea’s real-world autonomous driving test
South Korea has historically been one of the hardest markets for foreign automakers to crack. Hyundai and Kia together control close to 70% of the overall market and carry deep consumer loyalty built over decades. Tesla’s path into this market was an uphill battle due to high import duties, limited service infrastructure, and early skepticism about charging networks. In 2024, the Model Y was the best-selling imported car in South Korea with 18,717 units for the full year. By 2025, after the Juniper refresh, it cleared 50,000 units and took the top spot among all EVs.
Year to date, Tesla has a 250.8% increase in the country over the same period last year, and now holds a 30.8% share of the entire imported car segment for 2026. EVs as a category represented 48.6% of all imported passenger car registrations in May. As Teslarati has reported, the Juniper refresh brought meaningful improvements to range, interior quality, and ride refinement that addressed the most common criticisms of earlier Model Y versions. Those upgrades appear to be resonating in markets like South Korea where buyers compare Tesla directly against high end domestic competitors.
The Ontario Teachers’ Pension Plan (OTPP) stands to reap one of the most extraordinary returns in pension fund history thanks to a bold 2019 investment in SpaceX.
According to a recent report from The Globe and Mail, the Toronto-based fund invested roughly $300 million CAD (~$220 million USD at the time) in Elon Musk’s space company as its inaugural deal through the Teachers’ Innovation Platform.
At SpaceX’s anticipated $1.75 trillion IPO valuation, set for a mid-June debut on Nasdaq under ticker $SPCX, that stake could now be worth up to $11.6 billion USD. This would represent a roughly 50x return and easily become OTPP’s most successful single investment ever.
The fund manages $279 billion in assets for approximately 346,000 working and retired teachers in Ontario, potentially delivering an average boost of around $33,500 per member if fully realized.
SpaceX has filed its S-1 and plans to price shares at $135 each, aiming to raise a record $75 billion in what would be the largest IPO in history, surpassing Saudi Aramco. The company reported $18.67 billion in revenue for 2025, driven primarily by Starlink satellite internet growth and NASA contracts, though it continues to post significant losses tied to ambitious R&D in Starship and AI initiatives.
Important pieces moving forward include:
- Starlink Expansion: The satellite broadband service is scaling rapidly, targeting global connectivity, especially in underserved rural and remote areas. This segment offers massive recurring revenue potential as numbers climb.
- Starship and Reusability Leadership: SpaceX’s fully reusable Starship aims to slash launch costs dramatically, enabling frequent missions, Mars ambitions, and lucrative government/defense contracts. Success here could unlock exponential growth.
- AI and Diversification: Recent moves, including ties to xAI, position SpaceX in high-growth AI infrastructure, broadening beyond traditional aerospace.
- Validation Scrutiny: While the $1.75 trillion target excites investors, analysts like Morningstar value the company closer to $780 billion, citing high multiples (around 90x trailing revenue) and execution risks. A 180-day lockup period will prevent early investors like OTPP from selling immediately post-IPO.
The irony has not been lost on observers. Ontario’s government previously canceled a Starlink rural internet contract amid political tensions involving Musk, yet the pension fund’s savvy investment, made when SpaceX was valued around $33-36 billion, and Starlink was nascent, delivers outsized gains independent of politics.
For OTPP, this windfall strengthens its already solid 111 percent funding ratio and underscores the value of patient, innovation-focused capital allocation.
For SpaceX, the IPO marks a new chapter: greater transparency, access to public markets for talent retention and growth capital, and heightened pressure to deliver on its multi-planetary vision.
All eyes are fixed on whether SpaceX can justify its lofty valuation through sustained execution. For Ontario teachers, the returns are already stellar, but SpaceX, like other Musk companies in the past, has plenty of things to prove. Perhaps the most ideal person for the job is at the helm, hoping to bring the company to a massive valuation.
Tesla has its answer to grow its automotive sales over the next few years, TD Cowen analyst Itay Michaeli says, but it just has to bring it to the U.S.
On Thursday, Michaeli reiterated his $490 price target and the ‘Buy’ rating he already held on Tesla stock (NASDAQ: TSLA). However, its automotive division has struggled to show sequential growth over the past few years, mostly due to its focus on AI and Full Self-Driving. Tesla already axed two of its lower-volume vehicles with the Model S and Model X earlier this year.
However, Tesla does not need to engineer an entire new vehicle to trigger an upward tick in sales; it just has to bring it from China to the U.S., Michaeli said.
He is talking about the Model Y L, a slightly larger version of the all-electric crossover that is already available in China. U.S. customers have been pleading with CEO Elon Musk to bring it to the country since its launch in Asia last year, but he’s not convinced of it because of the advent of self-driving and its importance in this particular market.
The problem is that Tesla owners have been requesting something larger that could fit a typical American family. The Model Y L is slightly larger than the standard Model Y, but some are concerned that it could still be too small to fit what most people might need.
Instead, they have asked for a full-size SUV from Tesla.
Tesla gives big hint that it will build Cyber SUV, smaller Cybertruck
Nevertheless, the Model Y L still presents a great opportunity for Tesla in the U.S., and Michaeli says that there is an additional sales opportunity of about 100,000 units, with demand potential falling somewhere between 60,000 and 135,000 units.
TD Cowen’s note to investors also analyzed that Tesla’s growth could come from a stock perspective as well, positively impacting the stock price, as it has been widely reliant on vehicle sales, even though Tesla has truly phased itself away from that being an important metric.
Tesla stands to gain greatly from the introduction of the Model Y L in the U.S., but only if Elon Musk sees it as a viable fit for the market. Families may need to see Tesla bring something larger to the U.S., or they might be forced to buy from another automaker that offers something that fits is needs for more interior space to haul around the kids.
Tesla tipped its hand at where Robotaxi is heading next
Tesla just did something in South Korea that no foreign carmaker has ever done
