Don't understand Tesla finances? No worries, we've got you covered.
Here is a graph of Tesla revenue for years 2013-2018:
Revenue for the first half of 2019 was $10,890x106 (see explanation below). The revenue for the second half of 2018 almost doubled the revenue of the first half ($14,050x106 & $7411x106). If the revenue for the second half of 2019 increases by 50% of the first half, the 2019 revenue would be about $25,000x106. If it doubles the 2019 revenue would be about $30,000 x 106. The best guess might be some number between $25,000x106 and $30,000 x 106.
- Editor's Note: Just to clarify, as pointed out in the comments, 106 = 1 million. So, $25,000x106 = $25 billion. This is used since it fits more nicely in the charts and the author maintained the consistency in the subsequent text. Sorry for any confusion.
Here is a graph of net-income/revenue for years 2013-2018:
For the first half of 2019 the net-income/revenue is -83/10,891 = -0.76%. It is reasonable to expect some further ups and downs in the years ahead, but it is likely that this curve will become positive for 2019 due to the fact that the Model 3 production per week has increased by quarter-year as shown in the following graph:
Indications are that Model 3 production is close to 7,000/week now and will probably go to 10,000/week after the Tesla Gigafactory 3 in China starts production of the Model 3 later in 2019 or early in 2020.
The onset of Model Y production and Model 3 production in China may dip the net-income/revenue percentage again, but it should eventually rise faster.
Another important financial number is “free cash flow” roughly defined as “Free cash flow can be defined as a measure of financial performance calculated as operating cash flow minus capital expenditures.” Another way to state it is: “what is available for distribution among all the securities holders of a corporate entity.”
The Tesla yearly numbers for free cash flow are:
Here is a graph of free-cash-flow/revenue for years 2013-2018:
CEO Elon Musk stated that for 2Q-2019 Tesla free cash flow is +$619x106 and “free cash flow positive in future quarters with the possible temporary exceptions around the launch and ramp of new product.” And, Tesla “is now at the point of being self-funding," The 2Q-2019 revenue is $6,350x106, so the free-cash-flow/revenue is +9.7%. For the first half of 2019, the ratio is -285/10,891 = -2.6%. If this trend continues, which appears likely, Musk’s statement is correct.
It is informative to plot the quarterly Model 3/week with the net-income/revenue and the free-cash-flow/revenue in the same graph:
It is seen that the low values for the ratios are when production is being rapidly ramped up to a higher number of vehicles/week. This should not surprise anyone who understands the finances of a large startup company!
My conclusion is that Tesla's finances are typical of what usually occurs for large upstart companies that go on to greater things.
L. David Roper, http://www.roperld.com/personal/roperldavid.htm 28 July 2019