01—Abstract
Summary
Summary of the 8-K filed July 2, 2018. Cited figures are marked; the original filing is the authoritative source.
On July 2, 2018, Tesla furnished a press release under Items 2.02 and 7.01 of Form 8-K announcing preliminary Q2 2018 vehicle production and deliveries.
Tesla produced 53,339 vehicles in Q2, a 55%a increase from Q1 and the company's most productive quarter to date. Model 3 production (28,578) exceeded combined Model S and X production (24,761) for the first time, and the Model 3 weekly production rate more than doubled during the quarter. The company delivered 40,740 vehicles (18,440 Model 3, 10,930 Model S, 11,370 Model X).
Because the filing is a furnished rather than filed document, its content is not subject to Section 18 liability unless specifically incorporated into another filing. The most important investor takeaways are the Model 3 ramp and the gap between production and deliveries. Tesla reported 11,166 Model 3 and 3,892 Model S/X vehicles in transit at quarter end, to be delivered in early Q3, and noted the Model 3 in-transit count was driven by a late-quarter production surge.
Management also stated the remaining net Model 3 reservation count was roughly 420,000, and that a 5,000-per-week Model 3 rate was reached, with a target of 6,000 per week by late August. Tesla reaffirmed its guidance for positive GAAP net income and positive cash flow in Q3 and Q4 2018, while warning of pressure from a weaker U.S. dollar and likely higher tariffs on vehicles imported into China and components sourced from China. The release also reiterated the 2018 target of 100,000 Model S and Model X deliveries and said Model S/X delivery timing is being shifted to a more linear quarterly flow across regions.
Tesla cautioned that delivery counts are subject to a possible variance of up to 0.5%b and that deliveries are not a substitute for quarterly financial results, which depend on cost of sales, foreign exchange, and the mix of directly leased vehicles. Forward-looking statements carry the usual risks identified in Tesla's SEC filings.
02—Key points
Key Highlights
- Q2 2018 production of 53,339 vehicles, up 55% from Q1 and the highest quarterly output in Tesla's history
- Model 3 production (28,578) exceeded combined Model S and X production (24,761) for the first time
- Q2 deliveries of 40,740 vehicles: 18,440 Model 3, 10,930 Model S, 11,370 Model X
- Model 3 production reached a 5,000-per-week rate, with a target of 6,000 per week by late August 2018
- Large in-transit inventory at quarter end: 11,166 Model 3 and 3,892 Model S/X vehicles, expected to be delivered in early Q3
- Reaffirmed guidance for positive GAAP net income and positive cash flow in Q3 and Q4 2018, with flagged headwinds from a weaker USD and higher China-related tariffs
- Model 3 reservation backlog of roughly 420,000 net reservations; 2018 Model S/X delivery target of 100,000 unchanged
03—Questions
Frequently Asked Questions
Did Tesla meet its Model 3 production goals in Q2 2018?
Tesla said it reached a 5,000-per-week Model 3 production rate, with Model 3 output of 28,578 in Q2 and roughly 20% of last week's Model 3 output coming from the new GA4 line. Management expects to reach 6,000 per week by late August.
Why did Tesla's deliveries lag its production in Q2?
Tesla had 11,166 Model 3 and 3,892 Model S/X vehicles in transit to customers at quarter end, mainly because of a significant increase in Model 3 production late in the quarter. These vehicles were expected to be delivered in early Q3.
Is Tesla still on track for profitability in the second half of 2018?
Tesla reaffirmed its guidance for positive GAAP net income and positive cash flow in Q3 and Q4 2018, though it noted that a weaker U.S. dollar and likely higher tariffs on China-imported vehicles and China-sourced components could pressure results.
What is the outlook for Model S and Model X deliveries in 2018?
Tesla left its 2018 target of 100,000 Model S and Model X deliveries unchanged and is shifting production timing across regions to produce a more even flow of deliveries through each quarter. Q2 orders and deliveries for these models were both higher than a year earlier.
How much demand is there for the Model 3?
Tesla reported roughly 420,000 remaining net Model 3 reservations at the end of Q2, after delivering 28,386 Model 3s to date. Management expects orders to grow faster than production once customers can test drive the car at local stores.
04—Continue