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Tesla posts record deliveries in Q2; hedges a bit on full year outloook

Tesla Motors delivered 11,532 vehicles in the second quarter of 2015, and produced a record 12,807 vehicles, exceeding plan (12,500 units) while improving efficiency, according to the company’s quarterly letter to shareholders. This represents a 15% sequential increase in production and a 46% increase from a year ago. Total GAAP revenue was $955 million (+24% year-on-year) for the quarter, while non-GAAP revenue was $1.20 billion (+40%). Net GAAP loss was $184 million (almost triple the $62-million loss in Q2 2014); non-GAAP net loss was $60.2 million (an almost 4x increase). Total Q2 gross margin was 22.3% on a GAAP basis and 23.4% on a non-GAAP basis.

Globally, Model S orders increased following the launch of 85D (earlier post) and 70D (earlier post). In the US, Q2 Model S orders grew almost 30% year-over-year. In Europe, Q2 Model S orders grew more than 50% year-over-year, despite two price increases in the past six months. In Asia, Q2 Model S orders nearly doubled from last quarter, helped by the initial success of a revised China strategy. Encouraged by this improvement, Tesla is increasing its investments in China by planning to grow this year from one to five retail stores located in high foot traffic areas.

Tesla now has 487 Supercharger stations globally and recently accelerated the pace of deployments suchthat one new Supercharger station is opening nearly every 24 hours. The company is also retrofitting sites with a new liquid-cooled charging cable to allow even faster Supercharging capabilities that it plans to introduce over time.

Q2 Results. Automotive revenue was $1.12 billion on a non-GAAP basis, and comprises GAAP Automotive revenue of $878 million plus a net increase of $242 million in deferred revenue and other long-term liabilities as a result of lease accounting. The average selling price of Model S declined during the quarter due to a product mix shift away from P85D.

Q2 Automotive revenue included $27 million of total regulatory credit revenue, of which $14 million came from the sale of ZEV credits. Q2 Automotive gross margin excluding ZEV credits was 23.9% on a non-GAAP basis and 22.9% on a GAAP basis. Non-GAAP gross margin was about 100 basis points below guidance, primarily due to higher manufacturing and part costs related to the ramp of our small drive unit line and the deferral of revenue recognition for certain Autopilot features which are now scheduled for release later this year.

Q2 Services and other revenue was $77 million, up 85% from a year ago. This includes about $32 million of powertrain sales to Daimler, $23 million of service revenue and $20 million of pre-owned Model S sales. Q2 Services and other gross margin was 2.2%, compared to negative 3.2% last quarter. The 540 basis points of sequential improvement was driven by production efficiencies related to powertrain sales and improved margin from services and merchandise sales.

Outlook. Tesla expects to produce just over 12,000 vehicles in Q3, representing a more than 60% increase from a year ago, and to deliver approximately the same number of vehicles as in Q2, despite having one week of planned shutdown in Q3. This includes a small number of Model X deliveries.

The company is now targeting deliveries of between 50,000 and 55,000 Model S and Model X cars in 2015—a slight hedging from earlier projections of a solid 55,000.

While our equipment installation and final testing of Model X is going well, there are many dependencies that could influence our Q4 production and deliveries. We are still testing the ability of many suppliers to deliver high quality production parts in quantities sufficient to meet our planned production ramp. Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter. Furthermore, since Model S and Model X are produced on the same general assembly line, Model X production challenges could slow Model S production. Simply put, in a choice between a great product or hitting quarterly numbers, we will take the former. To build long-term value, our first priority always has been, and still is, to deliver great cars.

—Shareholder letter

For 2016, Tesla is projecting a steady-state production and demand of 1,600 to 1,800 vehicles per week combined for Model S and Model X.

Tesla will begin production of Tesla Energy products this quarter at the Fremont factory, with a plan to ramp up production in Q4. As a result, it expects Q3 services and other revenue to grow modestly and gross margin to be comparable to Q2.

Tesla plans to expand Tesla Energy battery module and pack production at the Gigafactory in Q1 2016 on a more automated line, where construction remains on plan.

Operating expenses should grow roughly 5-10% sequentially in Q3, and 45-50% for the full year as the company invests in product development, including Model 3, and expands sales capability. The company still plans to invest about $1.5 billion in capital expenditures this year to expand production capacity, purchase Model X tooling, construct the Gigafactory, and expand stores, service centers and Supercharger network.


Account Deleted

Tesla is still:
- the only car maker in the world with a zero pollution long-range BEV.
- the only car maker in the world with a car that can update all of its software based system (control, entertainment, safety and convenience software system) over the air. Tesla's cars keep getting better after purchase just like smartphones.
- the only car maker in the world that as standard offers free fuel for any long-distance driving for the life of the car.
- the only car maker in the word that as standard offers 8 years, unlimited miles warranty on their drive train.

It amazes me that Tesla keeps being so much ahead in so many areas simultaneously. By now I would have expected some competition from one or two other car makers but that has clearly not happened and now I do not expect competition for Tesla until 2018.

I was curious to see if Porsche's introduction of their plug-in Panamera and Cayenne might reduce the demand for Tesla. But that has clearly not happened. In H1, 2015 Porsche only sold 3000 plug-in cars whereas Tesla sold 21500 Model S. Now I expect Porsche to sell about 6000 for 2015 and Tesla to do 50k to 55k as expected by Tesla.

Tesla indirectly said they are building capacity to make 800 Mode X per week and has the capacity to make 1000 Model S per week but they are uncertain whether their capacity to build the Model X is available in December or first in January. If the production ramp up to 800 Model X is delayed by 5 weeks Tesla will sell 50k cars for 2015 if it goes according to plan it sell 55k.


Tesla's inventory, which is finished cars and materials to hand, rose by 27% since December.

That is a 27% increase with no commensurate increase in sales and at 75% of sales value represents over 120 days of supply,probably much more as average selling prices are falling and that is based on $100k

That is astonishing for a company which officially does not produce stock cars.


I meant to include that inventory stood at $1.2 billion at the end of June.

Account Deleted

Tesla is growing its quarterly sales by about 50% measured annually so of cause its inventory is also growing at approximately the same rate. Nothing noteworthy there.

If you look at the global sales stat what has changed the last year is that last year's performers Nissan, Mitsubishi and GM has stopped growing their PHEV sales. BYD and Tesla keeps growing very well and new to the market is VW group and BMW. For H1 the sales can be found here

I expect Tesla and BYD to be bigger than Nissan for the hole year. I also expect VW to grow as they have introduced or are about to sell a lot of new PHEV models. VW group is now by far the automaker with the largest number of different PHEV models. I would say that by now Nissan and Mitsubishi is clearly feeling the competition from VW and BMW. Tesla is in another league. They do not yet have any competition. So far Tesla is still only supply restricted.

Account Deleted

This is awesome! Watch Tesla's upcoming super charging robot.


There should e a law requiring all electric car makers to build chargers that can charge all electric car models in the market, maybe for a mall fee for other companies vehicles,just like bank ATMs, for the benefit of the industry as a whole.


TESLA will have to find ways to make acceptable profits with its EV/battery production/sales. Issuing more and more shares to finance expansion and product development is a strong possibility and it should work as long as it can increase the profit margins.

Bob Wallace

DaveM - Tesla is building ModX cars ahead of the release date. They have many hundred finished and ready to ship.


Seer : There should be a law requiring all electric car makers to build chargers that can charge all electric car models in the market.

At this time only Tesla has used its financial resources to set up a supercharger system. This network has the express purpose of facilitating long distance travel by EVs. It is not meant to be a replacement for local charging. You may be interested to know that Tesla is already experiencing problems with congestion at one of its charging stations from its own customers, no less, primarily those who reside within a few miles and discovered that they can do ALL of their charging on Tesla's tab. Tesla Central monitors the network 24/7 for signs of trouble and also sends vacancy data to all cars via internet so that the driver can pick the nearest open bay. In addition the control center is aware of the VIN numbers of all the cars that are currently on charge at their public facilities and could deny service to any car if warranted.

OTOH, nobody is preventing Audi from setting up their own network. In fact separate facilities in nearby locations could avoid possible future conflicts breaking out between drivers of diffent brands.

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