10-QPeriod: Q2 FY2020

Tesla, Inc. Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 28, 2020For Securities:TSLA

Summary

Tesla's second quarter 2020 results demonstrate resilience amidst the COVID-19 pandemic. The company reported improved profitability and revenue compared to the prior year's quarter, driven by strong automotive sales, particularly of the Model 3 and Model Y, and a significant increase in automotive regulatory credit revenue. Despite temporary production suspensions, Tesla successfully resumed operations across all manufacturing facilities, indicating strong operational execution and adaptability. The balance sheet shows a healthy increase in cash and cash equivalents, reflecting robust operating cash flow generation. Management also highlighted continued progress in expanding manufacturing capacity globally with new Gigafactory developments. While acknowledging ongoing economic uncertainties, Tesla expressed confidence in its liquidity and ability to fund future capital expenditures and operations.

Financial Highlights

51 data points
Beta

Revenue

$6.04B

21.0% Gross Margin

Net Income

$104.00M

1.7% Net Margin

EPS (Diluted)

$0.03

Total Assets

$38.13B

Cash & Equivalents

$8.62B

Free Cash Flow

$418.00M

Financial Statements
Beta
Revenue$6.04B
Cost of Revenue$4.77B
Gross Profit$1.27B
R&D Expenses$279.00M
SG&A Expenses$661.00M
Operating Expenses$940.00M
Operating Income$327.00M
Interest Expense$170.00M
Net Income$104.00M
EPS (Basic)$0.04
EPS (Diluted)$0.03
Shares Outstanding (Basic)2.78B
Shares Outstanding (Diluted)3.11B

Key Highlights

  • 1Generated $104 million in net income attributable to common stockholders for Q2 2020, a significant improvement from a net loss of $(408) million in Q2 2019.
  • 2Total revenues for Q2 2020 were $6.04 billion, a slight decrease of 5% year-over-year, but driven by a strong increase in automotive sales revenue (+13% to $10.31 billion for the first six months) and automotive leasing revenue (+29% for Q2).
  • 3Automotive gross margin improved significantly to 25% in Q2 2020 (vs. 19% in Q2 2019), benefiting from increased automotive regulatory credit sales and manufacturing efficiencies.
  • 4Ended the quarter with a strong cash position of $8.62 billion in cash and cash equivalents, an increase from $6.27 billion at the end of 2019, supported by positive operating cash flow.
  • 5Continued to expand its manufacturing footprint with progress on Gigafactory Shanghai, Berlin, and the acquisition of a site for Gigafactory Texas.
  • 6Despite temporary production suspensions due to COVID-19, operations resumed at all manufacturing facilities, with management focused on increasing output and adding capacity.

Frequently Asked Questions

Tesla showed significant financial improvement in Q2 2020. Net income attributable to common stockholders was $104 million, a substantial rebound from a net loss of $(408) million in Q2 2019. Total revenues saw a slight dip of 5% to $6.04 billion, but this was largely due to a decrease in 'Services and other' revenue, while automotive sales and leasing revenues showed year-over-year growth for the six-month period.

Improved profitability was driven by a combination of factors. The automotive gross margin significantly increased from 19% in Q2 2019 to 25% in Q2 2020. This improvement was fueled by a substantial increase in revenue from automotive regulatory credits and enhanced manufacturing efficiencies for the Model 3, including lower freight and duty costs from localized production in China.

Tesla ended Q2 2020 with a robust cash balance of $8.62 billion, up from $6.27 billion at the end of 2019. This was supported by strong operating cash flow. Management expressed confidence in their liquidity position to fund ongoing operations, significant capital expenditures for factory expansions (Gigafactories in Shanghai, Berlin, and Texas), and debt obligations. They also noted unused committed amounts under credit facilities for additional flexibility.

Tesla temporarily suspended operations at its manufacturing facilities in early 2020 due to COVID-19 but successfully resumed operations at all facilities by the end of Q2 2020. The company is focused on increasing output and adding capacity. Expansion projects, including Gigafactory Shanghai, Gigafactory Berlin, and the newly acquired site for Gigafactory Texas, are progressing, though management acknowledges uncertainties related to construction and ramp-up timelines due to the pandemic.