Tesla Q2 Report: Model 3 Design Complete, 50,000 Sales Guidance For 2nd Half

AUG 3 2016 BY JAY COLE 85

Tesla reports Q2 2016 earnings: Revenue in line, earnings miss

Tesla reports Q2 2016 earnings: Revenue in line, earnings miss

Tesla Motors reported its 2nd quarter earnings after the bell on Wednesday; and as always, the investor focus ultimately was on the “where are we going from here” part of the report, although the “what just happened” part is still the topic of the day.

4,638 Model X SUVs were sold in Q2

4,638 Model X SUVs were sold in Q2

For the quarter Tesla reported revenues of $1.56 billion, which was in line with most expectations right around the $1.6 billion mark, up 31% from a year ago.

Losses for the quarter however came it steeper than expected at an adjusted $1.06 per share ($150 million)

As for Q2 deliveries, which the company had earlier reported missing sales expectations of around 17,000 vehicles, by selling just 14,370 EV during the quarter; that has now been revised up slightly to 14,402 (1,132 of them being leased); consisting of 9,764 Model S sedans and 4,638 Model X SUVs.

Gross margin stood at 21.6% (GAAP) and 20.8% on a non-GAAP basis.  Automotive margin came in at 23.1% (GAAP), ex-ZEV revenue (non GAAP), the number was 21.9%.

Looking ahead Tesla states that it “…expects GAAP and non-GAAP Automotive gross margins excluding ZEV credits to increase by 2-3 percentage points through Q3 and Q4.”  However, we do feel it necessary to note that original guidance was for a level of 30% to be achieved by the end of 2016.

Production & 2nd Half Delivery Guidance

Tesla acknowledges “significant challenges” in the first quarter and entering Q2 with getting production up and running how they would like, but that is reportedly behind the company now.

Production finally eclipses the fables "2,000 per week" level

Production finally eclipses the fables “2,000 per week” level

“We exited Q2 consistently producing nearly 2,000 vehicles per week and our total Q2 production of 18,345 vehicles constituted a new quarterly production record, up 18% from Q1 and up 43% from Q2 last year.”

From conference call (Musk): The CEO adds some color to Tesla’s official statement: “We were in production hell for the first six months of this year”

With confidence in the refined production process, that also netted less “production hours per vehicle” at the end of Q2, Tesla says they are on track to “support about 50,000 deliveries in the second half of this year,  with automotive gross margin improvement.”

Which of course translates into a full year sales prediction close to 80,000 vehicles:

Q1: 14,810
Q2: 14,402
Q2/Q4: ~50,000

Total: 79,212

Tesla says it hopes to be producing the Model S and X at a rate of 2,200 units per week (combined) by the end of Q3, and at a level of 2,400 per week in Q4.

From conference call (Wheeler CFO): “clearly disappointed in our delivery numbers”

From conference call (Musk CEO): Tesla CEO confirms current run rate at 2,000 EVs per week right now, says that the current production split between Model S and X is about 50/50.

Tesla Model 3 - Now In Design Lockdown, Some Production Equipment Already Online

Tesla Model 3 – Now In Design Lockdown, Some Production Equipment Already Online

Tesla Model 3

Ok, now for the “sexy” part of the earnings report.

Tesla says that the “pencil’s down” moment has actually been passed, as the company has completed the design phase of the Model 3, as well as released the car for tooling, production planning and validation.

Further still, Tesla states that “some Model 3 production equipment is already on line, including initial capacity in our stamping and paint centers. Later this year, we plan to begin construction of new Model 3 body and general assembly centers.”

From conference call:  Tesla is asked on Model 3 reservation total and recent controversy if the number is 373,000 as before or lower.  Tesla stands by the 373,000 number without an update/further info “in terms of disclosure” as per CFO Jason Wheeler

From conference call (Musk): On the July 1st production goal. Musk again tries to explain the fuzzy logic of the date, saying it is internal and for suppliers.  Musk states that “the deadline (normally) would be under wraps” but isn’t because of the high profile nature of the company.  Musk re-iterates that actual production will kick off at some point after July 1st.

Demand for Tesla products up 67% in Q2 (InsideEVs/Alex Wai)

Demand for Tesla products up 67% in Q2 (InsideEVs/Alex Wai)

Tesla Product Demand

Despite not being able to "show" the refreshed Model S/60 kWh cars for much of the month, orders still came in

Despite not being able to “show” the refreshed Model S/60 kWh cars for much of the month, orders still came in

Apparently the new base 60 kWh trim levels of the Model S and X were a big hit, with the company stating orders surged in Q2.

“With the addition of Model X orders, total Q2 net new vehicle orders rose 67% from a year ago.”

Tesla did not split out order demand between the sedan and the SUV, but noted that Model S orders were still higher despite having no “refreshed” Model S vehicles to show off in stores for the full quarter – and none at all internationally until June.

“Model S average prices increased 3% sequentially, due to higher option take rates and the modest price increase associated with the Model S refresh. Model X average prices were more than 15% higher than for Model S, despite declining sequentially as mix shifted away from Signature Series variants.”

Resale Value Guarantee Discontinued in North America

As we reported earlier this month, the long-standing RVG (resale value guarantee) program ended in the US and Canada in June.

“Introduced in 2013, our resale value guarantee (RVG) helped reassure customers that Tesla vehicles would retain value over time.

Since both our new and pre-owned Tesla vehicles are selling well, we discontinued the program in North America. We still offer an RVG when it can help lower customer monthly payments in certain international markets that have less compelling financing options.”

Tesla Boutique Store In Sydney

Tesla Boutique Store In Sydney

Retail Expansion

Tesla Gallery In Houston, Texas (InsideEVs/Josh B)

Tesla Gallery In Houston, Texas (InsideEVs/Josh B)

Seen as part of the core of the Tesla business, the company is focusing on expanding its retail presence in a big way during the 2nd half of 2016, saying that they plan to add a new boutique store every 4 days between now and the end of the year.

“We are adding stores in new population-dense markets like Taipei, Seoul, and Mexico City, while also adding stores in our most mature markets like California.”

Tesla adds the stores of tomorrow are superior to those set up in the past.

“The quality of our new locations is also improving as many shopping malls now consider us the new standard for an anchor tenant based on the amount of foot traffic that we draw and our very high revenue per square foot.”

Tesla Gigafactory dimensions expressed as only Tesla can

Tesla Gigafactory dimensions expressed as only Tesla can

Gigafactory Update

Given that the Gigafactory’s grand opening was only a few days ago, and we were treated to a full tour of the facility (watch the tour here), as well as a speech by CEO Elon Musk and CTO JB Straubel  (presentation here) on all the workings/progress of the factory, there wasn’t much new to report.

“Gigafactory construction remains on target to support volume production of Model 3 in late 2017, and we recently accelerated construction to reach a rate of 35 GWh/year of cell production in 2018. This will allow us to meet the needs of our accelerated Model 3 production plan.”

Solar City Acquisition

SolarCity Carport Structure

SolarCity Carport Structure

Tesla also didn’t have much to say when it came to the merging of Musk-related companies.

“Finally, we signed a definitive agreement to acquire SolarCity. Buying the largest residential solar energy installer and generator in the United States along with its unique panel technology will further our mission of accelerating the world’s transition to sustainable energy. We see significant opportunities for product innovation and integration, and we shared our initial thoughts on synergies earlier this week.”

If interested, more details (and Tesla’s full statement) on the $2.6 billion dollar deal can be found here.

From conference call: Morgan Stanley’s Adam Jonas gets poses the obvious question of whether not Musk’s other company Space-X will be a Tesla acquisition target too.   Seems like a joke in there somewhere, but Musk quickly shoots down the suggestion with logic, saying there is no good reason for doing something.  Musk does add that there is a “little cooperation” between the two – which is news to us.

Future Products (from conference call)

Tesla semi-truck and mini bus to debut next year, but Tesla not looking to spend a lot of money after Model 3 gets out.  So the Tesla “truck-thing” and bus has an ETA of “less than 5 years”, with a compact SUV sooner.

The compact SUV of course is assumes to be a re-imagining of the Model 3 platform, so that offering would be capitalizing on the low cost car.

Reaction to the earnings report and forecasting was fairly tepid as most of the numbers and news was expected.  TSLA traded almost completely flat in the first hour of extended trading after the report at about ~$226.00  (real-time here)

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85 Comments on "Tesla Q2 Report: Model 3 Design Complete, 50,000 Sales Guidance For 2nd Half"

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A swing and a miss!! But investors still see blue skies ahead. I guess Tesla worshipping is infectious.

Love what you said. Perfectly stated.

Why are you here?

Same reason as always, to cast the dispersion nets.

I guessing your that guy that got into Amazon 10 years too late.

2k cars per week means they will hit the H2 target.

Tesla quarterly earnings calls have settled into a pattern. “Things were bad. But we’ve got it sorted out now. And the future is going to be off-the-hook/exponential/mind-blowing.”

Thing are only “bad” if you listen to the glass-half-empty crowd.

Production is up 43% year-on-year over 2nd quarter last year; revenue is up 31%. That’s what I call excellent growth! Why concentrate on the 15% they missed the guidance by? That’s important only to investors. The rest of us should be celebrating Tesla’s continuing and resounding success!

Go Tesla!

Elon Musk’s swing and a miss would be equivalent to a batter stating that he is going to hit a homerun twice as far as anyone in history ever has, and then proceeding to only hit it one and a half times as far.

Right! If the batter aims to drive the ball 10 above the fence, but only barely manages to get it over, does the sportscaster call it a “miss”?

Hell no! It’s still a home run.

On the contrary..One needs to understand & grasp this concept . This is not your typical stock market overnight play. Musk is putting back all the profits to continue building This company that will change the way we Transport! Investors need to be understand & be patient. ALL WALL ST. IS INTERESTED IN., IS., SHOWING Quick Typical “PROFITS”. It doesn’t work like that in this case… Tesla will succeed in a BIG way…”MARK MY WORDS”

Tesla has, what we call in sports, upside.

LOL and it trades on a “forward Looking” PE ratio 🙂

Probably all in response to the overwhelming demand for the Model III. Tesla did not suspect such a response was even in the cards and now is acting accordingly.

“As for Q2 deliveries… has [sic] now been revised up slightly to 14,402… consisting of 9,764 Model S and 4,638 Model X.”

Well, that is much better sales of the more expensive Model X than I thought, based on numerous reports that various problems were still significantly slowing production and/or that cancellations in Model X orders were significantly biting into sales.

Obviously all those reports were wrong, every one of them. This really underscores how skeptical we should be about negative reports regarding sales or corporate performance by Tesla Motors.

More good news, perhaps even better news, is the narrowing between reported GAAP and non-GAAP gross profit margins. Hopefully that narrowing will sharply reduce the attraction of short sellers to Tesla’s stock… which hopefully will lead to significantly less FUD posted in comments here at InsideEVs!

Go Tesla!

You Wish!

To my understanding the main factor in the gap was from the resale value guarantee. With that gone, the gap should become very small.

That’s what I’ve read, yes. I’m not a “financial guy” so don’t know just how true that is, but here’s hoping it’s 100% true!

Thanks koz, I was going to mention that.

do you know what it is that makes the non-GAAP margins not GAAP? what is the value of the non-GAAP figure?

I don’t know much about it, but here’s an analysis (opinion) by someone who does:

http://www.fool.com/investing/general/2016/03/27/how-tesla-motors-could-be-profitable-if-it-wanted.aspx

thanks for the link P2.

Pu-Pu said:
“More good news, perhaps even better news, is the narrowing between reported GAAP and non-GAAP gross profit margins. Hopefully that narrowing will sharply reduce the attraction of short sellers to Tesla’s stock… which hopefully will lead to significantly less FUD posted in comments here at InsideEVs!”

Yes, focus on gross profit margin and totally ignore expenses, which are growing at a faster rate than revenue, and totally ignore Telsa’s negative operating margin, which include expenses!

Tesla missed badly on earnings. Tesla had a net loss of $293.2 million under GAAP for the 2nd quarter, which equals $2.09 a share, compared with a net loss of $1.45 a year earlier. Under Tesla’s adjusted non-GAAP results, its net loss was $150 million, which equals $1.06 a share for the 2nd quarter, compared with a loss of 48 cents a year earlier. Wall Street had expected a non-GAAP loss of 59 cents a share; Tesla’s non-GAAP loss is almost double that figure.

You’re delusional Pu-Pu. 🙁

Only a FUDster would focus on the “miss” in Tesla meeting its guidance, rather than the fact that Tesla’s sales and Tesla’s income sharply increase every year; increase far faster than any other auto maker of any real size.

Yes, it’s true that Tesla’s debt is growing. Most people would recognize the increase in debt is a reflection of increased investment in future growth, and thus a good thing for Tesla Motors (and long-term investors in Tesla’s stock), so long as it pays off in increased future sales.

Only a short-selling, Tesla-bashing FUDster would characterize prudent investment in future growth as a negative thing, or talk about missing guidance without noting that this merely means Tesla didn’t grow its production quite as fast as it planned to, altho the company is certainly still growing rapidly.

I must admit, sven, to a certain amount of schadenfreude, watching you TSLA short-sellers twist in the wind, as Tesla’s stock price stubbornly refuses to drop into the basement, as you endlessly predict it will. There is a place for short-selling, but there is no defense whatsoever for the way you FUDsters endlessly spew out negative, truth-twisting half-truths and outright lies to promote that short-selling.

Go Tesla!

I agree with you, and many of the ~400,000 too.

in my opinion FUD spreaders are not doing it so consistently without any material interest, so to speak.
They’ve been proven wrong so far many many times, yet they still insist with the same boring angles. It makes sense though, if tesla grows at the same rate in the next 5 years they may be a real competitor to the likes of GM, with ~2 mil cars. That,s a danger. Thus the endless FUD.

Tesla isn’t out of the woods, they have a ton of debt, but I have the feeling they can see the edge of the woods now. If they can get to selling the III in decent numbers for a quarter or two they will be good to go.
I just wish that would happen sooner rather than later.

To harp only on the loss, and the non-GAAP lost is the real world loss, is to show your financial/accounting incompetence.

“There is a place for short-selling, but there is no defense whatsoever for the way you FUDsters endlessly spew out negative, truth-twisting half-truths and outright lies to promote that short-selling.” … which in any other aspect of human activity would be simply referred to as ‘fraud’.

Yepers. To me though shorting Tesla just seems like you are asking for it when over 30% is held by Musk another 20% is closely held by a handful of big investors, then there’s the 25% held short, though part of that could be from the 25% closely held, they rent stock out to the short-sellers. So around 25% is held by others investors.

What I am getting at is that the dearth of shares makes Tesla, by the numbers, a very scary stock to short.

Well sven, after seeing what Mr Musk and company are capable of, our delusions have some merit! Yours on the other hand….

“4,638 Model X.” Well, that is much better sales of the more expensive Model X than I thought, based on numerous reports that various problems were still significantly slowing production and/or that cancellations in Model X orders were significantly biting into sales.” Actually I view that as pretty bad considering that Tesla suppose have more than 30K in Model X reservation. If that reservation still holds, then why bother to release a 60kWh version of the Model X and but then only shipped so few in Q2 which supposed to address all the production issues already. That means Tesla are still having problems with Model X production in terms of constrain. The good thing is that Model X is averaging 15% higher in price. That should pay for some of those “headaches”. The question is really long term forecast of the Model X. “but noted that Model S orders were still higher despite having no “refreshed” Model S vehicles to show off in stores for the full quarter – and none at all internationally until June” That is somewhat a concern but not a surprise due to my personal feeling of the two. I would choose Model S over Model… Read more »

ModernMarvelFan said:

“…why bother to release a 60kWh version of the Model X… That means Tesla are still having problems with Model X production in terms of constrain.”

When I read the news that Tesla was releasing a cut-rate 60 kWh of their “Halo car”, it looked like a sign of desperation on their part. But the news here that 32% of Tesla’s car sales were Model X’s, pretty strongly indicates that my opinion (and that of others) was quite wrong! Or at the very least, it was an oversimplification, possibly a huge oversimplification, of Tesla’s complex corporate and financial strategies.

I won’t pretend to understand the intricacies of Tesla’s corporate and financial strategies; I will merely note that Tesla has regularly and repeatedly confounded analysts, and consistently out-performed expectations. In fact, I’d say Tesla has wildly out-performed the expectations of the majority of financial analysts.

So while I don’t really understand Tesla’s reasons for releasing new, lower-priced versions of the Model S and Model X, Tesla has shown that they know what they’re doing far better than most “financial guys” do. I’ll trust that this is still true.

Go Tesla!

Pu-Pu said:
“In fact, I’d say Tesla has wildly out-performed the expectations of the majority of financial analysts.”

Yep. Wall Street analysts had expected a non-GAAP loss of 59 cents a share. Tesla wildly out-performed their expectations, delivering a non-GAAP loss of $1.06 a share.

Go Tesla Fanboi!

Wall Street expected them to go out of business after 90 days. And they’ve been bitching and complaining since then.

The Company is now 10 years old with 10 Billion dollars of assets, and it makes new markets nearly every day. And yet we get analysis as this company is building 3 cars in grandmom’s garage.

Some people are afraid the fun will go away when you can no longer show your manhood by the roar of your glass pack mufflers as you wind out your old 340, four-speed barracuda.

Wall Street makes millions on Tesla’s stock and debt offerings. They love Tesla. Analysts are almost always bearish on companies who repeatedly miss targets, but not Tesla. Their analysts are mostly positive, hoping to get a piece of their next deal.

Short sellers (who usually live far from Wall Street to escape the institutionalized bull-think) naturally point out Tesla’s flaws. Just as longs point to their strengths.

“for Q2 deliveries… has [sic] now been revised up slightly to 14,402… consisting of 9,764 Model S and 4,638 Model X.”

Well, that is much better sales of the more expensive Model X than I thought, based on numerous reports that various problems were still significantly slowing production and/or that cancellations in Model X orders were significantly biting into sales.”

That was an increase of only 13 from the initial 4,625 number Tesla reported a month ago which they stated at the time could change by under 1% depending on delivery paperwork. What reports are you talking about? Maybe ones that came out before Tesla announced Q2 deliveries on July 3rd?

I think you’re defining the word “report” too narrowly. I didn’t mean an official financial report from Tesla; I meant “report” as in “it was reported that…”

And if you really need to know what I’m talking about, Google [tesla model x production problems]. Google reports about 1.32 million hits.

Sounds like reports of problems were accurate. Elon himself said they were in “production hell” for the first 6 months of the year.

We should be skeptical of all claims, regardless of the source, unless they are supported with data.

Well, I think the biggest thing that this article did not talk about… Model 3 production now to start in late 2017….

so…. no deliveries in 2017… and we still have another 6 months or more to push that into 2018 and 2019.

the losses just keep on getting bigger… and if the shareholders bail out Solar city… it will only get worse.

“volume production of Model 3 in late 2017”

Full understanding requires reading comprehension of the complete material. Limited production earlier in 2017 is what has been implied with volume production targeted for late 2017. That said, all Tesla projection should be taken with a certain grain of salt. The further out they are the more variable or less likely to be achieved. Even closer in they are stretch goals. On the other hand, compare their stretch goals to the legacy behemoths and even 20% misses are huge hits in comparison. Aim high and come as close as possible seems to be their motto.

In the long run, does it matter if they deliver 10,000 Model 3 in 2017 or 100,000 as long as they are delivering at an annual pace of at least 200,000 come the end of 2018? As a shareholder and a proponent of EV adoption, the latter is what really matters to me.

On the conference call did Elon say how many Model X Tesla bought back under the Lemon Law or from dissatisfied customers?

ROTFL!
😀 😀 😀

WOW, you are really grasping at straws for anti-Tesla FUD today, sven! A full-bore TES* attack, hmmm?

I rather suspect Musk spent just as many seconds discussing that as any other auto maker’s CEO did… which is to say, zero seconds. No doubt he gave it just as much attention as that extremely small number deserves during a conference call about important matters… which that ain’t.

*Tesla Envy Syndrome

ya know, if we ignore sven and the other ones they will go away. They thrive on attention.

Sadly, that’s not true. FUDsters aren’t merely trolls. They don’t require attention like actual trolls; they keep committing fraud (as Martin Winlow rightly pointed out, above) to promote their stock position.

FUDsters with a financial motivation for their fraud and negative propaganda, unfortunately, have a lot more staying power than mere trolls. For trolls it’s merely a pastime; for FUDsters it’s a business.

Your production figure estimates are off. If they are ending Q2 with nearly 2000 vehicles a week, and expect to end Q3 with 2200 vehicles per week, and growth to 2400 vehicles per week for Q4, then that means that minimally:
Q3 production will be no less than 2000 vehicles per week, or 25,000 vehicles for Q3
Q4 production will be no less than 2200 vehicles per week, or 27,500.
That puts manufacturing at a minimum for the second half at 52,500 which is within the guidance.
Maximally:
Q3 production will be no more than 2200 vehicles per week, or 27,500 vehicles for Q3
Q4 production will be no more than 2400 vehicles per week, or 30,000.
That puts manufacturing at a maximum for the second half at 57,500 which is within the guidance.
I’m working with a 12.5 week quarter, which factors in a loss of two weeks for the holiday year end and for delivery shortfalls.
Adding to the 29,212 already, and with the two week delivery/holiday buffer, that gives a range of:
81,712 to 86,712
I’m expecting a figure of 84,000. Check my maths, Internet!

Your math isn’t wrong. But 82K would have been near the low end of the guidance from earlier this year. 86K would be in the middle to slightly higher of the early guidance.

Either way, for a relatively high growth company, it isn’t exceeding guidance at any rate.

But that doesn’t matter because many investors only look at Model 3 plan as the key metric for Tesla’s future.

“Q3 production will be no less than 2000 vehicles per week, or 25,000 vehicles for Q3”

There will be weeks below 2000 in Q3. It’s just the nature of manufacturing.

OK, I can accept that likelihood. Just trying to figure out how the annual estimates would be below my calculated minimums, Jay.

I hate these financial articles. Is this Inside EV’s or the Wall Street Journal? Can we get back to drag races?

/sarcasm

🙂

…or better yet, let’s see more articles on how the “hydrogen highway” is the future of automobiling!

/even bigger sarcasm

Ask and you shall receive. Here you do Kdawg. Tesla just released a new “Design Collection” man purse! It’s called the Moab Weekender Bag, but unfortunately it’s only for referral program winners. 🙁

Where’s my Tesla fanny-pack?!

Ooh, now I just need my official Tesla sleeping bag.

3943 is the amount of car in transit.

That is more than $350 million in inventory that is stuck somewhere in Tesla’s distribution system.

Is that better or worse than last quarter? Anyone remember?

I would expect that figure to be higher because the volume is higher. The question is the proportions. Will they have close to 4,000 vehicles stuck in transit by year’s end or more, or less?

Every year, Tesla pulls out the stops to minimize what it calls “inventory”, which means not only cars caught in transit, but also the number of demo and service loaner units out in the field; they try to sell off as many of the latter as is practical. So, very likely the end-of-year number will be lower.

Personally, I keep hoping Tesla will abandon this feast-and-famine approach to manufacturing, and adopt a more regular, smooth approach to making cars, without this obsession over pushing to maximize sales numbers at the end of every quarter, and pushing doubly as hard at the end of every financial year.

It’s a slow boat to China, and Europe. They don’t ship them by Boing 747.

“With the addition of Model X orders, total Q2 net new vehicle orders rose 67% from a year ago.”

This is a loaded statement to control for. 400,000 cars could have been 20% of the 67% growth, or they could have been 80% of it. Very different conclusions would be left behind.

Jay is going to have so much more fun when these calls get “clouded” by the PV business. Confusing? I think it’s super possible.

Completely wrong, pjwood1. Model ≡ reservations are not orders.

And what’s with all the negative posts about Tesla coming from you lately? Have you become a TSLA short-seller?

Questioning a poster’s motives has a chilling effect on freedom of speech, and can be considered bullying. Please focus on points presented, not on the person.

Apparently you think “freedom of speech” means you, and sven, and tftf, and a few other perpetual Tesla bashers should be allowed to post as many half-truths and lies about Tesla Motors and its cars as you want, but nobody should be allowed to point out that your FUD is half-truths and lies.

I rather think that if we could go back and ask those who wrote the U.S. Constitution what was intended by “freedom of speech”, I doubt they’d agree with your interpretation.

It is true that unlike the opening of the Declaration of Independence, it is not self evident that all posts are created equal.

Not short, but the course change from Q4 15 was too sharp, for my risk appetite. So, I lightened up a lot.

It should be noted that, as a gross generalization, Tesla tends to really ramp production during the last month of the quarter in an “all hands on deck” fire drill, only to scale it back for the first two months of the next quarter.

Therefore, a production/sales rate of 2K per week at the end of the quarter cannot be considered to be evidence that average production will be sustained at or above those levels during the subsequent quarter.

That is not how manufacturing works. You don’t dial up the speed on the robots or give them extended smoking breaks at the end of the quarter. The largest shifts in orders come from whether they are shipped domestically or overseas. “Production” doesn’t change like that.

The steady increase in production come from adding new production lines, improvements in the processes varying from new methods to better controls of the process, and design modifications.

The shell game of monthly numbers come from the sales side not manufacturing.

Certainly one gets a skewed picture of the month-to-month variation in Tesla production, if one looks only at the InsideEVs Monthly Plug-In Sales Scorecard, which gives numbers only for North American sales. However, while we must always keep in mind that Four Electrics is one of the anti-Tesla FUDsters committing fraud in nearly all of his posts, I don’t think he’s entirely wrong in this case. I suspect if we had a record of the amount of overtime paid for Tesla auto assembly workers, that we’d see a spike in the last month of every quarter. I also suspect we’d see a lot more outgoing calls from sales staff during those last months; at least, there’s anecdotal evidence of that, reported by customers who Tesla sales reps have reached out to. There is also a question in my mind as to whether the pressure to push out as many cars as possible during the final weeks of a quarter might lead to quality control overlooking some problems. If you want to see an extreme example of this sort of “feast or famine” style of manufacturing, read Frederik Pohl’s Chernobyl, a historical novel about the nuclear accident. Pohl goes into some… Read more »

Probably they spent significant resource on designing Model-3 and gigafactory construction.

Now that the main part of construction is over and with the start of battery production, then can start ramping up the production of the Model-S & Model-X.

Its time a person like Warren Buffet/ Bill Gates invests in Tesla so that they can also add more labor to increase production.

“Now that the main part of construction is over…”

Are you talking about Gigafactory 1? The main part of construction is very far from being over. In fact, the footings for four new sections have been seen in recent photos, so it looks like the current footprint (the existing four sections) will very soon be doubled. And that doubling will still be less than a third of the intended full size!

Likewise, Tesla has hardly even gotten started on building out the Model ≡ production lines.

Expect Tesla to accelerate the pace of its borrowing and capital investments over the next two years; and expect the anti-Tesla FUDsters to whine even more loudly about the amount of money Tesla is borrowing to make those capital investments in increasing production capacity.

They went from making a huge fuss about Model 3 reservations to refusing to talk about them at all. I guess they don’t want to over-excite the market with the amazing new numbers, lol.

First half capex was 512 million but they forecast a massive ramp to 1.74 billion in the second half. Anyone understand that?? Gigafactory shouldn’t need that much since Panasonic owns the equipment.

I also don’t get how PP&E grew 590m when capex was 512m and depreciation subtracted 340m.

Net debt is ZERO (down from 1.45b at the start of the year). Anyone who says Tesla has a lot of debt doesn’t know how to read a financial statement.

RVG affects revenue a lot but earnings only a little. No serious investors or traders blindly use GAAP, anyway, so I don’t expect any effect on the stock price.

What’s your point about reservation numbers?
Once you get to numbers this vast, that stops people from reserving. There’s a two year backlog. There’s no point in reserving if your at the end of a 2 year queue.

It’s hard to believe that there’d be anyone on the planet who cold imagine that the Total Demand for the Model 3 will be Just the Current Reservation Holders.

They have accelerated Gigafactory construction, only about 1/5 built now. Cell manufacturing equipment is Panasonic, the rest is Tesla’s (material handling, processing, storing, pack manufacturing, recycling, etc). Model 3 line and product machines and tooling. Superchargers, stores, service centers.

Here is what has Tesla stated about expenses

Non-GAAP sales, general and administrative expenses reflect careful expense management and would have been flat sequentially, except for a one-time payroll tax expense of $17 million associated with the exercise of CEO stock options that would have expired this year.

The title of the article says a lot: We have Q2 report, but let’s not look at the figures, let’s dream about the future.
Tesla consistently ends a quarter with tremendous promises (Q1 it was model 3, Q2 it was gigafactory)to ofset the reality. At the end of Q3, the excuse will probably be the merger with Solarcity. That said:
I must say I like the car, but I would never buy Tesla stock. Remember that Musk is selling stocks as well.

So this company is going from 79k manufactured cars in 2016 to 500k cars in 2018? No, I don’t believe it. Tesla is (understandably) struggling to increase production 50%, increasing 500% in 2018 is just not going to happen.

True. But it will be like archery if they just hit/graze the target, not the bulls eye, they will still be fine.