Tesla has not recognized a significant amount of deferred revenue from future functionalities related to Enhanced Autopilot and Full Self-Driving Capability options. There were no ZEV credit sales during Q1.

Total Q1 operating expenses increased sequentially, due to the reflection of a full quarter of SolarCity operating expenses; $67 million of non-recurring charges related to the SolarCity and Grohmann acquisitions, and the end of Tesla’s work for Daimler.

Putting those aside, vehicle-related operating expenses increased 8% sequentially despite significant Model 3 vehicle development progress and expansion of customer support infrastructure.

Higher gross profit offset higher operating expenses in Q1, improving the GAAP loss from operations by $9 million. Q1 GAAP net loss attributable to common stockholders increased by $209 million sequentially, attributed to changes in non-cash items related to purchase accounting for SolarCity ($100 million); foreign currency translation ($35 million); net loss attributable to noncontrolling interests ($31 million); and non-cash portion of interest expense ($11 million).

Capital expenditures were $553 million in Q1, primarily for Model 3 and energy storage manufacturing capacity in Fremont and at Gigafactory 1, as well as for the expansion of customer support infrastructure.

Tesla raised $1.22 billion in net proceeds from the sale of common stock and convertible notes. The company is holding $4.0 billion in cash at the end of Q1—the highest level of cash it has had at quarter-end in its history.

Outlook. Tesla is maintaining its first-half forecast of 47,000 to 50,000 deliveries, representing 61% to 71% annual vehicle delivery growth. Tesla said it will provide guidance on vehicle deliveries for the second half of this year after Model 3 production begins in July.

Tesla expects Q2 GAAP operating expenses to be flat to slightly up from Q1, including expenses associated with the final stages of Model 3 development and growth in the customer support infrastructure. Tesla anticipates year-to-date capital expenditures will be slightly over $2 billion by the time Model 3 production begins.

Model 3. Tesla said that preparations at its production facilities are on track to support the ramp of Model 3 production to 5,000 vehicles per week at some point in 2017, and to 10,000 vehicles per week at some point in 2018. The company recently powered on its newest Schuler press line, and has started the commissioning process. This will allow sufficient time to install and tune die sets ahead of volume production.

Paint shop preparation has been completed and installations of dedicated Model 3 body welding and general assembly lines are progressing. Equipment installation is also underway for volume manufacturing of cells, modules, battery packs and drive units at Gigafactory 1.

As part of our Model 3 launch preparations, Tesla plans to add nearly 100 retail, delivery and service locations globally this year, representing an approximately 30% increase in facilities.