After market close today, Tesla released its financial results and shareholders letter for the second quarter 2018. The company delivered higher on revenue with a new record of $4 billion. It ended the quarter with a significant loss of $4.22 per share. As we reported in our preview post, Wall Street was expecting revenue of about $3.142 billion for the quarter and a loss of about $2.71 per share. We are updating this post with more details from the financial results and shareholders letter. The market is liking the results so far with TSLA being up about 3% in after-market trading. The results compare to revenue of ~$3.4 billion and losses of $4.19 per share (GAAP) ($3.35 per share non-GAAP) during the last quarter. Tesla says that Model 3 gross margin already turned “slightly positive” during the quarter and now it is expecting to achieve a “roughly 15%” gross margin on the vehicle in Q3. The gross margin will be enabled through a significant production increase to 50-55k Model 3s, according to the automaker. Despite the big loss this quarter, Tesla still has a sizeable $2.2 billion cash position and it now expects it to grow this quarter with the important production and delivery increases. Tesla now sees itself as being about to produce vehicles at a rate of 350,000 unit per year, which would make the company sustainable. The automaker is now on the road to increase production to over 500,000 units per year by ramping up Model 3 production to 10,000 units per week, which Tesla now expects to do with a lot less money. In the letter to shareholders, the company wrote that it is now guiding almost $1 billion lower in capital expenditure mainly due to the decision to ramp up Model 3 production to 10,000 units per week on the current production lines instead of adding new ones. Here we will be posting our follow-up posts about the earnings and conference call to expand on the most important points (refresh the page to see the most recent posts): Here’s the shareholder letter in full: FTC: We use income earning auto affiliate links. More. Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.<doc-sep>By Tesla’s second-quarter earnings for 2018 saw the California-based carmaker beat Wall Street revenue estimates after posting $4B billion in revenue and missed earnings estimates with a non-GAAP loss of $520 million. The results, which were posted in an update letter to investors after the closing bell on Wednesday, August 1st, showed second-quarter earnings of -$3.06 per share, slightly worse analyst estimates of -$2.92 per share. Compared to the previous year, revenue grew 43.5%. The company burned through $430M in cash in the second quarter. REVENUE AND OPERATING LOSSES The company’s revenue for the second quarter consisted of $3.36B in automotive revenue and $374M from their energy and battery storage division. Automotive revenue saw an increase of 46.8% compared to the same period last year. The energy and battery storage division saw an increase of 30.6% compared to the same period last year. Automotive revenue increased by 22.75% compared to Q1 2018, largely due to the rapid increase in Model 3 sales, while energy generation and storage declined by 8.7%. Tesla deployed 84 MW of energy generation and 203 MWh of energy storage products in the second quarter as well. MODEL 3 Tesla was able to deliver 18,449 Model 3 vehicles during the second quarter of 2018. In the quarter the company produced 28,578 Model 3’s. The company’s Q2 2018 Update Letter stated that the company still expects to reach its production goal of 6,000 Model 3’s per week by the end of August. The company is aiming to reach a gross margin of 25% on the Model 3 in the long-term but set an initial goal of break-even for the second quarter. The company beat that goal in the quarter posting a slightly positive gross margin. After conducting a complete breakdown, an automotive expert recently estimated that Tesla could achieve a 30% or higher gross margin on the vehicle. “Over the past 12 months, we have overcome bottlenecks across various stages of the Model 3 manufacturing process. Last quarter, it became clear that GA3, our main general assembly line, would likely become a production constraint if certain issues were not addressed. This assembly line, which is where we add all the components to a painted metal body, was designed to work with hundreds of robotic lifters that bring components to the line. Due to the density of the line and the relatively high downtime of the lifters, ramping GA3 became substantially more complicated than we had anticipated. That said, significant progress has been made in the last few months, and GA3 is now expected to reach a production rate of 5,000 per week very soon,” Tesla stated in the letter. The company reported that they have received over 60,000 test drive requests for the Model 3. Most Tesla stores received their first Model 3 test drive vehicles and the company plans to continue deploying more Model 3’s to other stores, with a focus on the new Model 3 Dual Motor Performance. The company stated that early results show that the Model 3’s “test drive-to-order conversion rate” is higher than the Model S and X. TESLA ENERGY Tesla deployed 203MWh of energy storage in the second quarter and 84MW of solar energy generation systems. Tesla stated that the company’s solar and energy storage division has undergone massive changes as they prepare to exclusively sell the products online and at Tesla stores. Energy Storage and Generation generated $374M worth of revenue for the company in the quarter. Tesla stated that 68% of all installations were cash and loan based, compared to lower-revenue generating lease-based sales. “We are steadily ramping Solar Roof production in Buffalo and are also continuing to iterate on the product design and production process, learning from our early factory production and field installations. We have deployed Solar Roof on additional homes in Q2 and are gaining valuable feedback from each new installation. We plan to ramp production more toward the end of 2018 and are working hard to simplify the production and installation process before deploying significant capital into factory automation,” Tesla stated in the quarterly letter. GUIDANCE FOR THE END OF 2018 Tesla still expects to deliver 100,000 Model S and X vehicles for 2018. The company also stated it targets to produce 50,000-55,000 Model 3’s in the third quarter. Tesla still did not disclose an overall production target for the Model 3 in 2018. The Model 3 is expected to carry a 15% gross margin for the third quarter and 20% in the fourth quarter. Tesla reiterated that they expect to be GAAP profitable in both the third and fourth quarter of 2018. Tesla also stated that they expect the company to be profitable going forward, despite rapid growth. Tesla has just over $2.23 billion in cash at the end of the quarter, down from $2.67 billion in the previous quarter. Today’s trading session ended with TSLA closing up .9% at $300.85. After-hours, the stock was trading up 3.9%. Tesla’s full Q2 2018 Update Letter can be accessed here. Tesla (TSLA) posts Q2 2018 financial results: $4B revenue, profitability in focus<doc-sep>With a pledge of future profitability and an apology for past bad manners, Tesla CEO Elon Musk was upbeat in his conversation with analysts during a second-quarter conference call Wednesday. Tesla shares soared as much as 11 percent in after-hours trading. The stock has been under pressure for some time as investors have worried about the cash the company was burning and whether it would be able to sustain its profitability. The electric car maker's second-quarter loss was wider than analysts expected, but the company backed its prior forecast that calls for profitable third and fourth quarters. "From an operating plant standpoint, from onwards I really want to emphasize our goal is to be profitable and cash flow positive for every quarter going forward," Musk said on the call. He added that recessions, or force majeure events could derail the plan but the goal is to be achieving positive GAAP income and cash flow "every quarter from here on out." Increased rates of production, improving margins, and cost cutting is helping Tesla hit its goal. Here's how the company did compared with what Wall Street expected: Losses: $3.06 per share vs. $2.92 per share forecast by Thomson Reuters Revenue: $4.00 billion vs. $3.92 billion forecast by Thomson Reuters One big step it made was completing its major cost restructuring plan in the second quarter, the company said. Tesla had $2.2 billion in cash on hand at the end of the quarter, and expects its cash reserves to grow in the second half of the year. It also now expects to spend less that $2.5 billion in capital expenditures in 2018, far below the $3.4 billion it spent in 2017. This quarterly update is a crucial one for Tesla. Investors have growing concerns about Tesla's ability to be consistently profitable, reported quality problems with its cars, and overall demand for the Model 3, which is the company's biggest bet by far. Tesla said it produced 53,339 vehicles in the second quarter and delivered 22,319 Model S and Model X vehicles and 18,449 Model 3 vehicles, totaling 40,768 deliveries. The company said in July it was able to repeatedly hit its target of producing 5,000 Model 3 vehicles per week. Production, though, is many months behind schedule and the company has resorted to setting up assembly lines in temporary tent structures.<doc-sep>
Tesla's second-quarter revenue should grow by more than $1 billion as the car maker delivered more Model 3 electric cars. But analysts predict that won't be enough to stop the company's net loss from rising dramatically when the Palo Alto, California, company reports earnings after the bell Wednesday. A net loss of more than half a billion dollars. Analysts polled by FactSet expect a net loss of $629.9 million, 87 percent worse than the same quarter a year ago. Revenue should rise 43 percent to $3.99 billion. A "pretty ugly" cash burn as the company continues to shift from luxury vehicle manufacturer to mass market producer. Investors will be paying particular attention to how much cash the company burned up from April through June, with many questions about whether Tesla can generate enough money to pay debt, cover expenses and hold off returning to the capital markets for more cash. Some analysts are predicting a widening loss. "There's a potential for the cash burn to be pretty ugly this quarter," said Morningstar analyst David Whiston. The company had to spend to ramp up production of its lower-cost Model 3 small electric car, even constructing a tent in the parking lot to hit its target of 5,000 vehicles per week at the end of the quarter. "You have all the costs but none of the revenue because the revenue will hit in Q3" when the cars are delivered, Whiston said. UBS analyst Colin Langan predicts in a note to investors that Tesla used $900 million in cash last quarter, $200 million better than the first quarter but still a huge amount. The company is trying to move from a niche manufacturer of cars for the wealthy to mass production. Model 3 delivery, production and reservation updates. CEO Elon Musk has predicted profits in the third and fourth quarters as production and deliveries of the Model 3 increase. The car starts at $35,000, but the cheapest model that can be purchased now costs $49,000. Tesla expects to produce 6,000 Model 3s per week in late August. During the second quarter, Tesla laid off 9 percent of its workforce as it worked toward Musk's promise of making money. The company has never turned an annual profit and has had only two profitable quarters. Tesla also asked parts suppliers for refunds, another sign of financial challenges, according to Langan. In July, Tesla reached 200,000 electric vehicle sales since 2010, the point at which a $7,500 federal tax credit starts to phase out. Tesla buyers will get the credit through the end of the year, then it's cut in half and eventually goes away by the end of 2019. That could cause some on the company's Model 3 waiting list of 420,000 to drop out because many are price-sensitive and need the credit to buy the car. How CEO Musk will handle questions on the company's financials. Last quarter, Musk dismissed analysts who asked questions about Model 3 reservations and other financial matters during the unusually combative quarterly conference call. Langan gives the stock a "Sell" rating and has a 12-month share price target of $195. Shares closed Tuesday at $298.14, up from $252.48 since the start of April. Langan expects an adjusted loss of $3 per share for the quarter, worse than the Wall Street consensus of $2.88.