Tesla announces First Quarter 2019 Update
Tesla announced that “We ended the quarter with USD 2.2 billion of cash and cash equivalents, a USD 1.5 billion reduction from the end of 2018. This reduction was driven by a USD 920 million convertible bond repayment and an increase in the number of vehicles in transit to customers at the end of Q1. In addition, we began production and deliveries of Model 3 vehicles for overseas markets. As noted in our Q1 2019 Vehicle Production & Deliveries letter, due to unforeseen challenges we had only delivered half of the quarter’s numbers ten days before the end of the quarter. This caused a large number of vehicle deliveries to shift into Q2. In Q1, we experienced non-recurring items that negatively impacted our net loss by USD 188 million. As a result of Q1 pricing actions taken on Model S and Model X, we incurred net USD 121 million loss for increases in the assumed forecasted return rates for cars sold under our Residual Value Guarantee and Buy Back Guarantee programs, as well as inventory write downs for used and service loaner inventory. We also incurred USD 67 million due to a combination of restructuring and other non-recurring charges.”
Highlights
GAAP operating loss of USD 522 million, GAAP net loss of USD702 million, including USD 188 million of non-recurring charges
Model 3 gross margin ~20% in Q1
Revealed Tesla Model Y
Started production of Full Self Driving computer
Vehicle production and deliveries
We produced roughly 63,000 Model 3 vehicles in Q1, which was approximately 3% more than the previous quarter. This improvement in production rate was modest mainly due to changes to the production process for the introduction of new variants of Model 3, fewer working days and a supplier limitation. We started production and deliveries of Model 3 vehicles for overseas markets during Q1. To quickly meet international demand, Europe and China Model 3 builds occurred in the first half of the quarter, with builds for local US markets in the second half. This wave of quarter-end deliveries in the US, China and Europe meant that even short delays caused deliveries to be deferred to Q2. To improve our operations, cost efficiency and customer experience, we are in the process of balancing our regional vehicle builds throughout the quarter.
Model 3 was yet again the best-selling premium car in the US in Q1, outselling the runner-up by almost 60%. This is not surprising given that, for the first time in history, the price of an electric vehicle is lower than its gas-powered equivalents. While global premium vehicle sales reached 8 to 9 million units (depending on definition) last year, the Model 3 is attracting buyers from other segments. Since introduction of Model 3 Standard Range and Standard Range Plus, 69% of trade-ins were non-premium vehicles, indicating that Model 3 is demonstrating appeal beyond the premium segment. Our global expansion for the Model 3 has just begun, competing in a segment that is vastly larger than just the US. Model 3’s average selling price (ASP) in the US remains strong, as a majority of these orders are for long range or all-wheel drive versions. We are also seeing increasing take rates of our Autopilot options, as this suite of features improves.
Deliveries of Model S and Model X declined to 12,100 vehicles in Q1 compared to our two year run rate of roughly 25,000 units per quarter. This decline was mainly caused by weaker Q1 demand due to seasonality, pull-forward of sales into Q4 2018 in the U.S. due to the first scheduled reduction of the federal EV tax credit in Q1 and discontinuation of our 75 kWh battery pack. We also had a mismatch between orders and deliverable cars. For example, due to adjustments in pricing mid-quarter, the take rate for the performance versions of Model S and Model X increased faster than we were able to supply.
In Q1, the Model S and Model X production line was updated to accommodate the next generation of powertrain for these vehicles. Our flagship vehicles now have a longer range and better performance. Model S, with a 370 mile (EPA) maximum range, and Model X, with a 325 mile (EPA) maximum range, remain the longest range EVs ever made by a wide margin. These products continue to lead in motor efficiency, allowing us to achieve improved range at a lower cost without increasing the capacity of our battery packs. With an efficiency of 3.3 EPA miles / kWh, Model X is at least 25% more energy efficient than other SUV electric vehicles (2.1 to 2.6 miles / kWh). These efficiencies also enabled us to re-introduce more compelling standard range versions – Model S with a 285 mile (EPA) maximum range and Model X with a 250 mile (EPA) maximum range – at an improved price point.
Source : Strategic Research Institute