Tesla 2017 Q2 Earnings: Revenue Beats Expectations, Bullish Outlook Continues


Tesla reports loss of $401.4 million with revenue of $2.79 billion

After being on the receiving end of enthusiastic and glowing press in the wake of its Model 3 initial customer handover event, Tesla has now just published the cold, hard numerical truths of its 2nd financial quarter of 2017. As is its wont and prerogative, these numbers are, of course, wrapped up in a deftly-spun, positive narrative that the company hopes will inspire investor confidence. Let’s take a closer look, though, and let’s see if you should call your broker.

Tesla Model 3 interior

Tesla has a history of coming up short of analyst’s expectations. Obviously, that’s not its fault, but it is something to keep in mind during earnings season. This time around, the estimates have been close, with Zacks Investment Research expecting a a $2.00 earning-per-share (EPS) loss — other estimates have been lower, at -$1.82 — and the actual EPS coming in at -$2.04.

Earlier estimates had suggested a smaller loss, but it was raised after the automaker recently reported only about 22,000 units of the Model S and X were delivered in the second quarter, which is over 3,000 vehicles short of forecasts (it delivered 25,051 in Q1 of 2017, by comparison). While Tesla put this shortfall down to “production challenges” that delayed 100-kWh battery packs, it has been read by many as further proof of slackening demand for these higher-end vehicles.


Q2 revenue for the company overall was unexpectedly up, coming in at $2.79 billion — it was $2.7 billion in Q1 and was predicted to fall to $2.1 billion — while operating expenses were down to $908 million from $925 million in the first quarter of 2017. Automotive gross margin, an important metric that indicates the level of profit on each vehicle built rose to 27.9%, up from 27.4% in Q1, despite CEO Elon Musk’s Q1 prediction that it would fall.

Breaking that revenue down into its various streams, we can see that automotive revenue was $2.29 billion, with energy generation and storage bringing in $286.78 million. An additional $271.17 million came from “Services and other,” which includes used vehicles sales, among other things.

Some Tesla Model 3 production S-Curve action (via Tesla)

Where Model 3 stands

With the first Model 3 sedans now beginning to trickle out of the Fremont factory, production estimates are pretty much what we’ve already heard: 100 units this month, 1,500 in September before climbing the steeper part of the S-curve and culminating at 5,000 per week sometime in December. The target rate for 2018 is said to be 10,000 per week.

While we expect there to be some churn, with one survey stating as many as seven percent of reservation holders unlikely to go through with their purchase, the earnings report states they the company has been receiving about 1,800 new reservations a day since Friday’s event. There’s no telling how that will taper off going forward, but we expect the increases will offset declines unless there is some major hiccup, like a severe technical problem or other negative news.

Elon Musk has said the company has received about 500,000 reservations to date. The company also says it has $3 billion in cash on hand. It also boasts that it opened 29 new stores and service centers in the 2nd quarter, bringing that total to a nice round 300.

Where’s my solar roof?

The first Tesla solar roofs have been completed at the homes of customer employees, echoing the tactic taken with the first Model 3 cars. These pilot products have been pieced together at the Fremont factory, but regular production should begin at the Tesla Buffalo, NY “Gigafactory 2” by the end of the year. We hope to get further information about this production ramp a little later this evening during the call with analysts.

Looking Forward

As we noted, Musk expects deliveries of Model 3 to ramp upwards exponentially. The Model S sedan and Model X SUV are predicted to see much smaller gains over the next six months, though gains nonetheless. Margins on the Model 3 are expected to be minimal at first, only going positive in the fourth quarter. By next year, though, expectations are for it to hit a significant 25 percent.

You can check out the Tesla Second Quarter 2017 Update letter in its entirety at this link or in screen grabs below.

*Additional information from the call with analysts is forthcoming


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69 Comments on "Tesla 2017 Q2 Earnings: Revenue Beats Expectations, Bullish Outlook Continues"

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Tesla is doing great, considering that they have “Osbourned” some of their demand now.

“Services and other” is kicking butt. Perhaps Tesla is rediscovering what Henry Ford learned a century ago: High end cars have great profits but few buyers. To make a profit on most cars, you need to sell parts, “services” (like financing and leases), repairs and other thing like fleet sales and govt. contracts.

Tesla is still a bright, hyperactive teenager at 14 years old, in an industry full of 100 year old geezers stuck in the past. Its like when teens discover sex and love at 14, and think they stumbled on a big secret that their parents never knew. 🙂

Actually, Tesla said they saw a 15% INCREASE in Model S and Model X reservations in July. The Model 3 has increased S/X sales in the short term. Much to the surprise of Elon who expected S/X sales to drop. Too early to tell what the long-term impact will be to S/X sales.

(source: Tesla conference call via my faulty memory)

I must say I’m surprised too. I definitely thought it(Model 3) would ave negative effects.

Well, maybe some don’t think Model 3 is good enough so they went back to Model S/X.

I can’t say I expected it to happen, but I hoped it would, so I’m not at all surprised that the publicity over the Model 3 release has attracted more buyers to the Models S/X.

Heck, there were even recent reports on such mainstream TV news sources as CBS Evening News and the PBS News Hour about Tesla starting sales of the Model 3. That’s a lot of high-power media attention to Tesla!

None of that made any sense at all.

What would have been useful to see how Tesla was doing would be to parse out the costs of expansion in battery, car and solar tile production from current operating costs/revenues to see if Tesla services current demand would it be profitable.

Would Tesla be near GM’s $6.00 a share vs. Tesla -$2.04 a share if the spending to ramp up production in every area were zeroed out. Don’t see Tesla or the Wall St. analysts answering that question.

It might be quite a bit of a wait, for a chance to see Elon and Tesla lift their Foot off the Go Pedal of Expansion, Massive Investment, and New Market Entries:
(Tesla Model 3, + Tesla Semi, + Tesla Model Y & New Roadster, potentially Tesla Mini Bus, etc. Then there is the Superchargers Explosive Expansion from 6,000 to 18,000 in just 17 Months from now, if Elon Gets His Way)!

However, if the Model S & X sales increase over the balance of the year, from some ‘Reverse Osborn Effect’, they might even be abel to see loss per share get below $1.00 by some point around Year End!

It seems they need a Hyperloop Speed to cut delivery times, so they don’t have more than a very few ‘In Transit’, instead of the 3,000+ lately!

“It might be quite a bit of a wait, for a chance to see Elon and Tesla lift their Foot off the Go Pedal of Expansion, Massive Investment, and New Market Entries.”

Should be easy enough to figure out from current financials and necessary for any investor to know, for the company itself to know.

You go ahead and do that, since you think it’s so easy.

And then those of us who don’t care about such deep financial analysis, since we’re not investors in Tesla stock — as you clearly are — will ignore it.

Not that there was any doubt you’re shorting Tesla stock, from your serial Tesla bashing, but thanks for confirming that.

The automotive industry requires constant re-investment. Every vehicle GM launches GM is already spending billions on it’s replacement for the next iteration. The capitol costs never go away.

Despite various attempts to tarnish it’s reputation and, question it’s ability to produce a revolution, it proceeds apace.


Lost almost over $400 billion dollars….wow.
Compare that to $2.4 billion and $2 billion net profit for GM and Ford, respectively.
But Tesla is just a startup blah blah blah.

$400 MILLION. My bad.

They talked about this in the conference call. The Model 3 ramp up means they have the expenses of an assembly line for 5,000 cars a week, but the income of 30 cars a month.

They described it as the same as building a factory to make soap. The first bar of soap costs $5 million dollars to make.

Talking about losses while still at the bottom of the S-Curve is like the folks who said GM loses 100K on every Volt they build. It was fake math, and quickly and widely debunked. So unless you want to revive the 100K losses for the Volt meme, what is your point?

(of course this isn’t how any business actually calculates costs or profits on a line of products. The profits are based upon much longer term numbers.)

I’m kinda thinking this isn’t any kind of actual fact based analysis in bro1999’s comment. Simply the anti-Tesla knee jerk nonsense we always see from him.

Please point out anything inaccurate I said.

Or, you could have chosen to compare the little $400 Million Loss, against some Aerospace Firms, in the news for having Losses in the area of $5,000 Million (Yes, $5 Billion) in one Quarter!

Serial anti tesla troll thomas

You shouldn’t compare the worse with the even more worse….

The lack of accuracy is in your distortion of context. $100 M is only 3.5% of Tesla’s $2.79 Billion in revenues in Q2. So yes, it is an inaccurate distortion of the facts to over-hype where 3.5% of Tesla’s revenues came from. Are you seriously trying to make a big deal out of 3.5% of Tesla’s revenues? No wonder it never came up in the conference call. 3.5% is a rounding error on Tesla’s revenues. Professional investors asking questions in the call all had much more important questions to ask. It simply wasn’t relevant to them. So why are you trying to hype it? ____________________________________ PS — This is the law working as designed. Car makers who would otherwise have to spend more money to earn ZEV credits are instead saving money and helping Tesla build cars. It is win-win. The ICE car makers save money vs. losing money on small volume ZEV’s that can’t compete. GM has bought ZEV credits when it otherwise would have been more expensive to sell more Volts and SparkEV’s. That saved GM money. If GM chose to pass any of those savings on to Bolt buyers, you potentially saved money buying your GM car… Read more »

You failed at pointing out any inaccuracies in my above comment. Nice way to meander off topic though. You should apply for WH communications director.

You are correct, I responded to the wrong post. My mistake.

All of this was intended to be a response to your mumbling and grumbling about 3.5% of Tesla’s revenue coming from ZEV credit sales.

All of the entire post still stands as factually correct, and 100% accurate, in the context of responding to your post below about ZEV credits.

Model 3 launch cash burn (which started last year) will be inverse to the S-curve in Model 3 production. Due to improvements in the terms they negotiated for their supply chain, they will have 60 days to pay for the parts they use to build cars that they expect to deliver within 30 days. So they will get paid for the car before they have to pay for the parts used to build the car.

This makes the S-Curve ramp-up somewhat self-funding, which will greatly reduce cash burn. Tesla believes the will hit 25% margins on the Model 3 in 2018.

I know you guys refuse to believe this, but it takes money to launch a new car, build out superchargers for those cars, build service locations and build service loaner cars, expand factories, hire employees, etc.

Profit always comes after sales, not the other way around. (yea, hard to believe!!)

Gosh, how terrible that Tesla keeps misplacing all that money. Maybe they should hire a private eye to ferret out why all that money keeps disappearing?

Or maybe, just maybe, Tesla isn’t “losing” money at all. Maybe it’s investing money in an astonishing growth rate of more than 50% per year!

Hey, there’s a thought… 🙄

They will gain that back on the sales of only 40000 Model3. They have ten time as much reserved.

One day you will be waiting at a red light, and Model 3 will come up beside you, and the driver will look at your car and laugh to himself. He will then stare you in the eye, and you know what that means, but just don’t, just don’t. Don’t give him the satisfaction! Let him race away at the green light, while you comfortably drive home in your subcompact EV.

btw, good thing the tax payers bailed out GM or you would not be driving that Bolt.

Clearly, you have no idea about startup burn rate. With current Tesla valuation, that’s only 1% “loss” rate. Investors should be so lucky to find a startup with so little loss while making huge strides in product.

Now if it’s an established company losing so much and no prospect for better product, it might be alarming, like Apple losing $800M when Gil Amelio was in charge. But even with that, look where Apple is now.

Tesla has had the chance to slow ambition and repeat profitable quarters, like Q3 ’16, but has chosen instead to pursue growth. Stop growing, and gross margins will lead to profits just about any time they want.

I’d guess industry “participants” might want a slower growing Tesla, because then their market share will stop hitting the exits. “It wasn’t supposed to be this way. No!!”, you can almost hear from the corporate suites.

The conference call is over. I started taking some rough notes part the way in. These are rough and I didn’t have rewind to check them. This is very incomplete, but here is what I got (grammar Nazi’s should not read): S/X orders are up in July 15% over Q2. S/X Deliveries up 53% YOY in Q2 vs. 2016. Net Model 3 orders up 1,800/day, despite their attempts trying to sell S/X instead of 3. This includes cancelations. Calls current S/X/3 “Generation 4” of Tesla EV’s First pilot Solar roof installs are done. They are following the same production S-curve as the Model 3, with employees getting first installs. “When we make mistakes it is because we are stupid, not because we want to mislead anyone” Capex to continue to go to Model 3 and gigafactory, plus Supercharger installs and Gigafactory2 (solar). S/X capex is minor, and much of capex is being invested into cost reductions which will be passed on to customers. More Gigafactories coming, to be announced by end of year. Model Y will include substantial carryover in parts from Model 3, and won’t be a completely new platform for first generation of Model Y in order to… Read more »

How much in ZEV credit sale earnings?

If they covered it in the call, I missed it.

Doesn’t GM get a lot more than Tesla on that front?

$100 million in ZEV profit.
Without that, they would have lost a cool half billion last quarter.

Compete, or write the check. Just don’t get clever. The pig lipstick is running out of colors.

See my response above. I made a mistake and posted it in response to a different post of yours.

Clap! Clap! Clap!

Good read!

“Net Model 3 orders up 1,800/day,”

That’s terrible news. At this rate, it might be quicker to legally immigrate from Mexico to US without any US ties (“line” is over hundred years long) than to get Tesla.

What was that line from the last Century?

“Build A Better Mousetrap, And The World Will Beat a Path To Your Door!”

Tesla just showed that They Built a Better Mousetrap! Here they come!

Good job! Thanks Nix.


Hey, thanks for your summary of the conference call!

Much appreciated.

-$2.04 EPS !!! Wow, how great.
It just need to teleport – to + and the stock can be pumped up to the Moon! Or Mars maybe. And beyond!

“Earlier estimates had suggested a smaller loss, but it was raised after the automaker recently reported only about 22,000 units of the Model S and X were delivered in the second quarter, which is over 3,000 vehicles short of forecasts”

Tesla has revealed that Q2 included roughly 3,700 fully decked out Model S and Model X cars being built in that quarter for service loaners and demo cars for their growing number of service locations and store fronts. The increase in service loaners is also in preparation for the increased volume for Model 3 service appointments.

Tesla is getting ahead of the curve on service loaners 2 quarters before entering the S-curve of Model 3 production.

This indeed cut into profitability in this quarter, but this is also part of the costs of the ramp-up for the Model 3. This early investment will be paid for by future Model 3 sales.

This is Tesla being pro-active. The actual manufacturing numbers were actually about the same as the previous quarter.

While they have said they’ve increased the number of vehicles for test drives, etc, the vast majority of those 3,700 were actually built for customers, just undelivered.

Have you listened to the conference call? I certainly leave room for my ears to have been faulty, since I didn’t have the ability to rewind. But that is not at all what they said in the conference call.

The carry-over of undelivered cars to customers is on top of the cars they built for demos and service loaners. Tesla always has undelivered cars each quarter. That’s not what those numbers are.

Jeez, Nix. Have you got a lot riding on TSLA? I thought Dominick did a pretty good job, as new quarterly coverage for IEV. It was funny, though like George S said, to see WSJ initially sound more positive than this article originally began.

Lower than expected losses can cause a stock to soar. I was impressed by expected Model 3 gross margins. Musk’s shrewdness shows up in the battery option. He’s delivered a “$35,000” car (Ok, several months more wait), yet tantalized with a key element that will enable the gross margin target. -All the sales to be made at $44,000.

Having followed Tesla for so many years now, demand-elasticity at the lowest Model S price has always been “super-elastic”. The inventory and used car prices, always strong. $44,000 isn’t “entry level”, but there will be profitable demand. And lots of it.

I did listen to the call, and even took notes.(Link below)
My comment referred to a statment made a while ago, though.


WSJ had a decent report. They beat expectations which normally is good. Full speed ahead.

Kudos to tesla on model 3 launch and event, and masterful deception (http://on.mash.to/2ujwzw5#XSCqIiX8JZqx). Thats how todays DJT and others operate. Will see how many reservations convert at mid$40k-50k price point.
But there is No Doubt Peak model S And X has hit. 2nd worst month for US sales. again, there is no way over 55% of Q2 was sold International (so still fuzzy math)
Its all on model 3 to justify stock price. no more smoke & mirrors

Myss – Actually, Model S/X reservations jumped 15% in July, and the biggest reason why Tesla’s Q2 sales were lower than Q1 was because they built 3,700 demo and service loaner cars in preparation for the Model 3 ramp-up.

In addition, Model S/X sales are up 53% year-over-year compared with last year.

I dare you to find ANY other car company with a 53% year over year growth in sales, along with a 15% bump in sales in a single month. Much less one that is getting ready for a 500% massive growth expansion. Once you identify that car company (besides Tesla) let us know.

(current ICE car sales are actually down significantly…)

I appreciate your sensible reply back, although it is based on “drinking the reality distortion field koolaid coming out of teslas loose lips”. Those numbers don’t add up. Insideevs does a superb job of tracking us sales (10k for Q2). Tesla reports 22k sold as customer deliveries. There is No Way 12k (~55%) were sold international, period. It’s clear that USa Model S&X have definitely peaked. So there is some funny biz going on (you can read several reports). The hyperbole is getting out of control (per street.com report and my earlier mashable link)

Myss — These numbers came straight from Tesla’s official financial release, where the are required to sign off on the good-faith accuracy of the content under penalty of law.

Are you accusing Tesla of breaking the law and issuing false guidance numbers? Putting them under the threat of not only SEC penalty, but under the threat of shareholder lawsuits?

That’s a pretty big accusation to accuse them of breaking the law. That requires a big offer of evidence.

Do you have proof that Tesla is lying in there official guidance? If not, cease and desist.

I hope you know by now, after last Nov (DJT), that nothing is as what it seems, nor is black or white. There is a reason tesal refuses to break out sales by country. Nuff said. They can easily resolve the question marks, but that would break the distortiton field.

Hmmm, I think ffbj is right: You’re just a troll.

And one who seems to think people will believe his B.S. if he posts stuff that’s rather opaque and all “mysterious”.

If you can’t dazzle them with brilliance, baffle them with bull. — W.C. Fields

Dont reveal all Your own secrets.
But eventually it will be called out.
masterful deception (http://on.mash.to/2ujwzw5#XSCqIiX8JZqx).

I think so too.
Pretty obvious.


Obvious Troll is Obvious.

Myss — yet another swing and a miss. Your link does not actually support your specific accusation. It is just a whine-fest.

Do you actually have PROOF (as in hard evidence) besides some troll saying they don’t believe the information provided? Somebody’s lack of belief without evidence is not actually proof.

I don’t actually believe you are a new poster, and not just a previously banned troll trying yet again to sneak back into the site after being re-banned again. But I don’t actually have any evidence. See the difference between belief and evidence?

“Tesla reports 22k sold as customer deliveries. There is No Way 12k (~55%) were sold international, period.”

It’s either because you’re new to learning how Tesla operates, or else because you’re just another short-selling Tesla troll, that causes you to so strongly assert something well known to be is factually incorrect by anyone who knows much about Tesla Inc.’s business.

It’s entirely normal for Tesla to ship 50% or more of its production overseas in the first month of a quarter. This is compensated by a far greater percentage going to domestic (U.S.) sales in the last month of a quarter, which is why Tesla sales show such feast-and-famine variance over ever three months, if you look only at U.S. sales.

And either way, “Mystery”, it’s best to learn something about the subject you’re posting about before asserting that what someone else says can’t be true.

You still dont get it. That its Q2, not July (nice try to distort) If Tesla can break down how the 12k non-US got sold intl Or Not, then the issue would go away. There are Many report of HK, China other issues – So the numbers dont add up.
Regardless, the inside Evs numbers are staring you straight in the face.
good for Tesla to launch model 3. I hope that they did Sell those to the 30 employees. Im sure many of the Now corrected 455k (not over 500k conveniently distorted) will convert to sales. Thats the real test, its all a downward slope for S&X.

@Mystery said: “then the issue would go away”.
I predict however that you will not, go away, that is.
More’s the pity.

You’re hardly a Mystery. You’re an open book, and not a very good one at that.

When you only have brainless comments to file emptiness, that is the result. zero facts (maybe you cant read or too lazy)

You mean, like you doubling down on your ignorant assertion that Tesla couldn’t possibly ship 55% of its production overseas in the first month of a quarter?

If so, then you’re entirely correct.

Your frustration is weakening you. He never said 55% in the first month – it is the whole quarter.

Not sure why that is a problem. International have been about 50% and those markets are still expanding – like South Korea.

Almost 3,000 (2939) sales in Hong Kong in April. That would be one city. It was a total outlier but it was international deliveries in Q2. Tesla worked some magic here it distorts the international Q2 numbers.
(Hong Kong had a huge incentive expiring so that is why the outlier. May never be repeated)

So 12,000 international deliveries in Q2 when 1 city had 3,000 – registrations BTW. This doesn’t take some fudging numbers – I mean really.

Now how many S. Korea reservations do you think there are? The first store opened in March and in July a $23k incentive became available to Tesla. Do you think S. Korea has upper middle class people concerned about the environment or who appreciate high tech cars? South Korea is a 1.8 million auto market. Don’t know about protectionism though – but they are a huge trading partner with the US so probably not bad.

There is a chance US demand is flattening. That isn’t the whole story of course.

What is the re-buy rate for Tesla’s? I suspect it is over 80%. After 5 years, that is starting to be a factor. That factor will grow as sales grew – so that demand will look like sales from 3 years ago. Hint it was growing.

Each month the S gets better and that increases demand. Each year, the concerns about reliability and resale go down.

Presumably when autonomous driving gets better, demand may spike again.

There are a lot of demand drivers. We have been hearing about flattening demand for years. There has been an acceleration of people asking me about my car in the last few months. Care to look at Google search numbers?

“Do you think S. Korea has upper middle class people concerned about the environment or who appreciate high tech cars?”

South Korea was about the only place on the planet going as far as banning VW Group sales, after the fraud. Some of the ban still in place:

I bet Tesla can load a barge with 4,000 Model 3’s and find buyers, there. I still haven’t digested the reality that Tesla has introduced the Model 3 on time. Release of September’s production (~1,500, first “public”) will be an important milestone.

Yes agree impt engr Design milestone, mow Mfgr Engr production & robotic automation is Now The Most Impt. Will see if they convert / notify reserv list in CA abt higher ($44k+) price and public customer delivery, whether anyone in Svalley or LA can deal with their Tesla sales guy & just buy in Nov for Xmas/NYE. as for SKorea or any where else, if Tesla wants to transparently take that challenge, and give up the reality distortion, all would be interest to see the real results. Apple doesnt hide behind sub-15% China share ?️

Glad you are an intelligent person not a tesla koolaid swallower or blinded stock Pusher who whines and bullys to futilely flail to Pull the distortion sack over peoples eyes.
Yes maybe Intl Customer real deliveries willl be reported and fuzzy math wont exist. The china numbers do Not add up to support the distortion of 12k, And no other set of countries can make up the diff. Maybe tesla will somehow gain significant sales in SKorea, but whete is the real proof of anything when they have Hyundai kia (ionic) and fiercely loyal to Samsung home team. Same for Japan. Likely wishful thinking. Now Europe will ptotect with massive Deutsch battery gigafactory and sleek bmw ubiquitous electric hybrid & pure, SUV & supersport.
So again real test is the M3 reservation conversion, signs of list abandonment given semi-deceptive 2017 price point pre-event, and “Waiting List = 0 / Everyone who wants one has already bought one or Passed” which came sooner than was projected for model x