Money-making or money-losing quarter?

Hot on the noise of its Autonomy Day on Monday, Tesla announced Wednesday its Q1 2019 earnings reports. The automaker's report showed that profit levels achieved late last year could not be maintained in Q1 2019. Nobody expected high Q1 profits anyway though. However, the results are far worse than expected.

The main financial details from the report are as follows:

  • $4.5 billion in revenue
  • Loss of $4.10 per share 
  • Net loss of $702 million

And here's what Tesla was expected to report, according to analysts polled by Bloomberg.

  • Adjusted loss per share: $1.30
  • GAAP loss per share: $2.32
  • Revenue: $4.84 billion
  • Adjusted net income: -$222.14 million

Musk stated earlier this year that Tesla probably wouldn't profit in the first quarter. However, the CEO did expect Tesla to achieve profitability in the second quarter of this year. Now that too seems a bit questionable.

Tesla Model 3

The Model 3 is the primary focus of late. On this front, Tesla states:

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 S and Model X

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.

Some additional Q1 notes related to Tesla's vehicles and financials:

  • In Q1, we recognized $15 million in revenue from ZEV credit sales compared to less than $1 million in Q4 2018.
  • Approximately 2% of our vehicle deliveries were subject to lease accounting.
  • Model 3 gross margin declined slightly to ~20%.
  •  Model S and Model X gross margin declined in Q1 predominantly due to reduced volume and pricing actions.
  • As a result of the pricing actions, we adjusted our sales return reserve for cars sold with a Resale Value Guarantee or Buy Back Guarantee. This one-time adjustment had a negative revenue impact of $501 million with a corresponding decrease in automotive cost of goods sold impact of $409 million resulting in a $92 million reduction in gross profit.

You'll find Tesla's release in its entirety linked below. It includes some limited info on Autopilot, the Gigafactory in China and the Model Y.

Tesla Q1 2019 Earnings