Tesla’s (NASDAQ:TSLA) second-quarter earnings for 2019 saw the electric car maker post a revenue of $6.3 billion, falling short of Wall Street’s estimates. The results, which were discussed at length in an Update Letter, were released after the closing bell on Wednesday, July 24.
Following are the key points in Tesla’s Q2 Update Letter.
Earnings
Tesla reported a net loss of $408 million, translating to a loss of $2.31 per share, a notable improvement from the $3.06 loss the company reported in Q2 2018. In contrast, analysts polled by FactSet expected Tesla to report an adjusted quarterly loss of $0.39 per share. Estimize, a crowdsourced platform that aggregates estimates from analysts, executives, fund managers, and academics, expected Tesla to report an adjusted loss of $0.25 per share.
Revenue
Tesla reported revenue of $6.3 billion for the second quarter, which is also a notable improvement over its figures from Q2 2018, a time when the company showed a revenue of $4 billion. Analysts polled by FactSet expected Tesla to report sales of $6.5 billion in the second quarter, while Estimize placed Tesla at a slightly more optimistic $6.6 billion.
RELATED: LIVE BLOG: Tesla (TSLA) Q2 2019 earnings call updates
Cash Balance
Tesla’s cash balance reached new heights in the second quarter, thanks in part to a capital raise in May. By the end of the second quarter, Tesla had $5 billion in cash and cash equivalents. This is the highest in Tesla’s history to date. “This level of liquidity puts us in a comfortable position as we prepare to launch Model 3 production in China and Model Y production in the US,” the company wrote.
Model 3
The Model 3 has reached a sustained production rate of 7,000 vehicles per week in the second quarter. Tesla is still aiming to hit a production rate of 10,000 Model 3 per week by the end of 2019. Apart from these, the Model 3’s higher-tier variants remain popular among car buyers. “During the quarter, a majority of orders continued to be for a long-range battery option and the Model 3 average selling price (ASP) was stable at approximately $50,000. At the same time, manufacturing costs continued to decline,” Tesla wrote.
Gigafactory 3
Tesla’s Gigafactory 3 in Shanghai is progressing at an incredibly rapid pace. The general assembly building that will host Model 3 and Model Y production is nearing completion, and other structures in the complex, such as a substation, continue to take form. “Gigafactory Shanghai continues to take shape, and in Q2 we started to move machinery into the facility for the first phase of production there. This will be a simplified, more cost-effective version of our Model 3 line with capacity of 150,000 units per year – the second generation of the Model 3 production process,” the electric car maker wrote.
Guidance
Tesla has opted to maintain its guidance of producing a total of 360,000 to 400,000 vehicles in 2019. The company has noted that it is “working to increase our deliveries sequentially and annually, with some expected fluctuations from seasonality.”
Other highlights
- Cash and cash equivalents of $5.0B; Operating cash flow less capex of $614M
- GAAP operating loss of $167M, GAAP net loss of $408M, including $117M of
restructuring and other charges - Auto gross margin at ~19% in spite of reductions in vehicle ASP and lower regulatory
credit revenue - On track to launch Gigafactory Shanghai by end of 2019 and Model Y by fall of 2020
A link to Tesla’s Update Letter for the second quarter could be accessed here.
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