Tesla Q3 2018 Earnings Report: Record Revenue, Turns Profit

OCT 24 2018 BY ERIC LOVEDAY 116

Tesla has just released its Q3 2018 earnings and financial reports.

Among the highlights is information on Model 3 production, updates on the Tesla energy network, record global sales and so much more.

Looking Back –

Tesla Posts Q2 2018 Earnings Results

Tesla Q2 Financial Call

Tesla Posts Q1 2018 Results

Tesla Q1 2018 Conference Call Overload

Financial results for the third quarter of 2018 are as follows:

  • Revenue of $6.82 billion
  • Profit of $2.90 per share

Here’s what Wall Street expected, based on a number of estimates of analysts polled by Refinitiv:

  • Losses: 15-19 cents per share
  • Revenue: $6.33 billion

Here’s how it appears in the report:

 

Financials aren’t really our thing here at InsideEVs though, so let’s move on to what concerns us most.

2018 will surely be a delivery record year for Tesla, now that Model 3 volume and sales are increasing quite rapidly.  In fact, Model 3 sales just set a new all-time record.

The hot topic item in any recent Tesla report is the Model 3. In regards to that, Tesla stated:

The Model 3 production system stabilized in Q3. We went from a steep S-curve to more gradual monthly improvements. Among other things, we made the changes necessary to enable production of an All-Wheel Drive (AWD) version of Model 3, and we did this without disrupting our production rate. We started the quarter producing only Rear Wheel Drive (RWD) Model 3s and ended the quarter producing almost entirely AWD cars. Even though AWD cars are significantly more complex to build, we produced 5,300 Model 3s in the last week of Q3.

Labor hours per Model 3 decreased by more than 30% from Q2 to Q3, falling for the first time below the level for Model S and X.

Beyond that, Tesla provided an overall update on all three of its vehicles, stating:

In Q3, we delivered 27,710 Model S and X vehicles to customers. While demand in China remains challenging due to a 40% import duty for Model S and X, China deliveries still remained a material portion of our Q3 deliveries, and we managed to offset the decline there with growth in North America and Europe.

A comment was made in regards to Model 3 new orders too:

You’ll find an overload of additional information in the full release from Tesla posted below, as well as new details when the conference call gets underway later this evening:

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116 Comments on "Tesla Q3 2018 Earnings Report: Record Revenue, Turns Profit"

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Tassil A. Altaiz

Yeah Baby!

Model3 Owned- Niro EV TBD -Past-500e and Spark EV,

Crushed it. Model 3 assembly in China by end of 2019. Wow.

Gazz

That’s in Musk time. So expect it to happen in 2021.

koz

That’s quaint. M for months not years or there would be no Model 3 yet.

noleaf4me

Stuff happens a lot faster in China…..unlimited cheap labor!

antrik

It says *during* 2019, not end of 2019… Could be even earlier than end of next year. It’s unclear though what exactly will be done there in the first iteration…

Mark

Oh no baby it is going down…and guess what, why sit on risky Tesla, where there are bigger chances all over the place, so baby expect some more tesla sell-off soon…

arne-nl

Grapes? Sour?

Get Real

Can’t wait to see the shills, shortets and haters try and spin this!

Viking79

“surprise profit” only there was no surprise if you actually looked at their sales and what they were doing.

Doggydogworld

Revenue was no surprise. Expenses were lower than anyone, even Tesla, expected.

antrik

While some were hoping for a slim profit, I think the amount actually surprised everyone.

Fool Cells

already see the same old tripe…”They will never sustain the profitability”

theden0minat0r

Short sellers and skeptics said the same thing about Apple. Then Apple released the iPod and made a bunch of money on them. Analysts still said the iPod was a cool luxury item that was too expensive and only users of a mac could use. Of course, some Apple fanboys bought them, but they will never become mainstream. Apple is in over its head. Apple is leaning too heavily on the iPod revenue.

Over the next few years, Apple worked their tails off to make the iPod cheaper (iPod Mini) then made it better and cheaper still (iPod Nano). Then Apple made it affordable to everyone (iPod Shuffle).
These constant innovative revisions and led to future technological breakthroughs that led to the iPhone and iPad.
Which in turn allowed for further innovation within the original product line (iPod Touch).

Original iPod = Original Tesla Roadster
iPod mini = Model S
iPod Nano= Model 3
iPod Shuffle= New cheaper car yet unanounced
iPod Touch = New Tesla Roadster

Gasbag

“Can’t wait to see the shills, shortets and haters try and spin this!”

Ok Mr Green Jeans, Goo Goo Gaga, Dam Dan, Bronco-lost-the-bet, and the rest of you naysayers its time for you to acknowledge your failings as financial analysts ……..or change your handles…again.

antrik

The bears seem to have latched onto the product mix (high percentage of expensive Model 3 variants), claiming margins can’t be sustained as sales move to cheaper variants…

Almost everyone among the “big boy” analysts seems to have dropped the “need to raise capital” narrative though, as well as the “competition coming” narrative.

Jim-NJ

Wow! I wasn’t expecting that! If Tesla could replicate $2.90 a share each quarter for an entire year, their p/e would be around 25, which is high for a car company but low for a technology company. Of course, I’m sure Musk just produced earnings this quarter to say, “I told you so!”. I’m sure he’s planning to plough as much future earnings as possible toward expansion, like the new Chinese factory.

Robert Weekley

And… Still show a Growing Profit! Yeah Baby!

CPO

Hes’ got bills coming due to pay first. Then they plow all they want.

drpawansharma

I am more sure than ever that further expansion will be fueled by selling more shares to the market.

antrik

Don’t confuse earnings (i.e. profit) with cash flow. Profit should continue; while they said that cash flow in Q4 and/or Q1 will likely be more or less flat due to debt repayments.

Chinese factory on the other hand is supposed to be financed mostly by dedicated loans, i.e. not affect cash flow AIUI.

Edward Arthur

woohoo!

phEVfan

Let the weeping and gnashing of teeth begin.

phEVfan

I was on a Yahoo linked article about the new mid-range Model 3 about an hour before the announcement today. It was astounding the amount of FUD and crap that was being spewed in the comments. “It’s a niche vehicle and will never sell in volume” “they’ll never make a profit” “they’ll go bankrupt when the initial backlog is fulfilled and there are no more orders” “they’ll never actually get to the $35K version” They’ll die when the $7500 Fed Tax Credits go away in January” “EVs are dirtier than gas cars” etc. etc…
So many people still believe this stuff – even an hour before earnings announcement. (actually they probably still think it, but won’t admit so). Outside of Insideevs, it’s a FUD jungle.

Pushmi-Pullyu

Yahoo Finance? That place is a snake pit of anti-Tesla FÜD. The only reason it’s not worse than Seeking Alpha as the ur-source of FÜD dissemination is because activity is a lot higher at SA.

Neither is exactly an average example of what people say on social media about Tesla or EVs in general.

antrik

It’s actually not that many people — they are just very vocal.

(Some because they have a financial interest in harming Tesla; other are simply envious of someone else being successful, and/or unwilling to accept any change to the status quo…)

William

The “Profits” were right after all!

The Model 3 salvation has arriEVd, with gifts in hand!

$2.90 per share is welcome news, here’s hoping for $4.20 per share, to put it Bluntly, in Q4!

Somebody will be Smoking some Shorts, tomorrow at the opening bell!

Ron M

I’m sure a lot of shorters have a problem with skid marks today

CPO

Shorts will be smoking their shorts.

ffbj

Beat earnings expectation by $3.00/share. That was a first.

pjwood1

Since yesterday’s open, up 60pts. ($324). Charley Grant even congratulated “$TSLA Bulls”. This is a great story, on a DOWN market day.

-Cash, or FCF, was a big beat. +++881 million, net of capex!, putting the balance sheet cash as high as it was ending two quarters ago (Q1)! This was on no capital raise. With 3 billion, and expressed confidence that cost to build will fall along with ASPs, they shouldn’t need $$ to get to 10k (speculating)

For everyone wondering why CPO P85Ds are cheap, there was this line:
“Model S and X Performance mix declined roughly 4-fold since 2015” -IOW, they built tons of them.

ModernMarvelFan

Again, as long as you deliver, the stock will take care of itself… Shorter will be burned. No need to defend Tesla on twitter. Let the result and action speak for itself.

Good Job Tesla!

(⌐■_■) Trollnonymous

“o need to defend Tesla on twitter. Let the result and action speak for itself.”

Right!
Musk just needs to law off Twitter………lol

stimpacker

Eh if nobody corrects the fake news mafia, pretty soon all news will be fake news.

Right now, the mainstream media is trying to temper Tesla’s Q3 results with the notion that they are heavily taxpayer subsidized. “How taxpayers have boosted Elon Musk and Tesla”

Some people can post rubbish on Twitter without any repercussions. Some cannot. I personally do not use/view Twitter at all and rely on sites like IEVs for real EV news.

Sad that the day has come that I don’t trust old school media like WSJ, NYT, CNBC, LAT. WSJ especially had good reports.

TomN

Example headlines today:
Business Insider (before report): “Millennial investors are dumping Tesla ahead of its earnings (TSLA)”

Business Insider (after report): “Tesla is outselling many of its luxury rivals, but it still lags behind Mercedes, BMW, and Lexus”

Investopedia: “How Tesla’s Share Price Dropped $100 in 80 Days”

NBC opinion piece : “Elon Musk’s Twitter meltdowns are symptoms of a much bigger problem for Tesla”

Bloomberg: “It’s Too Soon to Say Tesla Is Out of the Woods, Analyst Albertine Says”

Yes, that is what they decided to headline with today.

One almost positive headline:
New York Times: “Tesla Reports a Rare Quarterly Profit, Its Biggest Ever”
‘Rare’? Maybe this is not what they intended, but it almost sounds like they are implying that they don’t expect it to happen again.

TomN
I just had a thought while looking at Business Insider’s headline: “Tesla is outselling many of its luxury rivals, but it still lags behind Mercedes, BMW, and Lexus” When the iPhone first came out it caused such a dramatic change in how people used phone systems, that Verizon and British Telecom had to completely change out their network equipment just to keep up (I knew someone in industry). I argued with some people online that this showed a change in the market and that eventually everyone would own a smartphone. A lot of people were arguing with me that these phones were too expensive and that the Symbian OS (used on Nokia phones) completely dominated the market in Europe and much of the world, and that as an American, I just didn’t understand this. I showed them a graph that showed that while Symbian still dominated, the curve of its market share was heading straight down. It was falling off of a cliff. It occurs to me that the same thing is happening now. A new type of car is disrupting the market and is quickly gaining market share. The analysts are seeing that the luxury car makers are still… Read more »
ModernMarvelFan

It doesn’t really matter if Tesla continues to deliver next quarter and quarter after that and quarter after that…so on.

The price will reflect the growth of the company in the long run. The short term drop is actually a great thing for long term investors to pick up more stocks at lower price.

The shorts eventually have to buy the shares to cover.

Benz

“Model 3 quarterly production and deliveries should continue to increase in Q4 compared to Q3.”

70,000 Tesla Model 3 deliveries in Q4 2018?

phEVfan

Easily 75k and possibly over 80k for Q4 since December is always a huge month for Tesla – and even more so this year because of the $7500 phase out.

Benz

“We expect to start taking orders in Europe and China for Model 3 before the end of this year.”

That’s some interesting news for people from Europe and China.

DAVID

That last bullet point is golden.

– Cash position increased by 731 million in Q3 despite repaying 82.5 million of bonds.

Doggydogworld

Odd they didn’t mention who got repaid….

Bla blubb

I have to say I was a skeptic, but well done. I hope this sends a bold message to all other manufacturers that you can earn good money with EVs even at volume.

stimpacker

I hope this sends a message to those POLITICIANS blocking the sale of an American-designed car that is made in America by Americans that Tesla is succeeding DESPITE their efforts.
They should be so ashamed of themselves.
Then again, if they were, they wouldn’t be called politicians.

Eli

2018; a historic time! Bringing EVs to the world became profitable!

REXisKing

Is there a PDF available?
I see no news on the Tesla site.

Billy Gomes

its under support on the right side, then in the bottom right in “investors”

Nix

Tesla puts their investor content at ir.tesla.com

Will

Ok now to the $35k steel roof model 3 standard range

robus

My guess, a solid roof will not appear. The glass roof is a signature feature and it would just complicate manufacture to have two different roofs.

Jimi seko

One of the main reasons a steel roof is cheaper: It can be made in-house using the same raw materials as the rest of the body

antrik

The glass roof is not made in-house?

GuyMan

It is not, Tesla does not have glass melting operations. Nor do the make their own steel, they stamp their own parts (and they even bought a mold maker), but they buy the glass roof as a component (just like the side windows, windshield, etc.).

antrik

I’m not so sure actually. It was reported a while back that a “Tesla Glass” division has been created — though AFAIK it was never revealed whether that was about the Model 3 glass roof, or the solar roof tiles, or the Tesla Semi nuke-proof wind shield, or yet something different, or all of the above…

arne-nl

Only if they can make it so cheap that they can put it in the $35 k base model and still have a good margin. The $35k model seems to be very important to Tesla and Elon Musk. It’s a promise they are determined to keep. So if it needs a steel roof to get to market, the Model 3 will be available with a steel roof.

Mark.ca

By the time it will show up it will cost same as the Mid after credits. If any are waiting for that in US they must be mathematically challenged….big time!

Robert Weekley

Or, they “Like Steel Roofs?”

antrik

Hoping to get full credit on a mid-range Model 3 ordered now is somewhat of a gamble… But even if you succeeded, it would still be $5,375 more than the base variant will be in H2 2019.

(Not to mention that base variant buyers might not be have enough income for full credit in the first place.)

Boltfan

Nice job, Tesla!!

mscott

This is great news, but let’s not be misleading on EPS. The $2.90/share comes from the non-GAAP profit, which is kinda like Tesla’s “with potential savings” prices on the Model 3 configuration page. It’s really dubious.

Actual GAAP EPS is about $1.75/share, which is still freakin’ great!

Pushmi-Pullyu

Thank you! I was wondering about that.

Great to see that there is a solid profit per share even with GAAP accounting! In ShorterLand, there will be much weeping, wailing, gnashing of teeth, tearing of hair and renting of clothes tonight!

Go Tesla! Keep going Tesla!

Robert Weekley

Nude Shorters? Ugh! Perish that Thought!

Milfan

Bravo Tesla, finally a profit has been made for a quarter. $2.90 / share is significant beginning.
Revenue of $6.8 billion/quarter annualizes to $26.8 billion/year which is 1/6 that of GM and Ford. Still a long way to go, but will slowly catch up.

Model-3 has become the hottest car in the country. Can we expect better results in 2018-Q4.

Still the shorts will try to short 1 way or the other. As usual the mainstream media will try to post some gloomy outlook.

If you have not noted, Tesla Model-3 has the highest revenue among cars in last 2 months US sales since cost/car is double that of Camry. Look at the YoY revenue increase of 158%. Anyway lets celebrate this day.

antrik

Increasing revenue by factor of six might already happen in a few years when Model 3 and Model Y are in full swing…

Milfan

How come the wall street analysts came up with an estimated loss.
They did not know the basic arithmetic ?
Or they calculated correctly and intentionally gave false info ?

Is SEC planning to sue them and put a $40 million fine on them.

Pushmi-Pullyu

I’m rather mystified, too. Elon sent a company email out on the day before the last day of the quarter, telling employees that Tesla had not quite reached net profit for the quarter, exhorting them to greater efforts. Any half-wit should have been able to figure out that at worst, Tesla would have only a very narrow loss.

Apparently there are no Wall Street analysts who are even half-wits. 🙄

Do Not Read Between The Lines

They didn’t think they would see those kind of margin improvements.

antrik

As I pointed out before, Elon didn’t say in that mail that they haven’t quite reached profit… Only that it’s not certain yet.

Most analysts indeed expected only a narrow loss.

Mike

I think there are a lot of analysts that didn’t believe that the Tesla M3 could be built for less than $35,000. Even with the Sandy Munro analysis, it is hard to think that the Model 3 can be profitable when GM loses $7,500-9,000 (those are the Munro and UBS figures, so don’t blame me) selling a Bolt that starts at $37,500.

Agzand

Assuming average selling price of $55k and 21% margin, it costs $43.5k to make the cars. More than both Bolt models. And this is with higher sale numbers than Bolt.

Pushmi-Pullyu

Economy of scale greatly affects the cost of building each unit of car (the “marginal cost”). If Chevy builds only ~30,000 Bolt EVs per year, but Tesla builds ~150,000-175,000 Model 3’s this year, then anyone with any real claim to be a financial analyst should be able to figure out that it’s entirely possible, even likely, that Tesla is going to have a substantially lower unit cost for building a Model 3… and that’s not even considering the fact that Tesla has the lowest per-kWh battery cost of any EV maker.

I’m sure Sandy Munro realizes that, even if many or most “financial analysts” are incapable of seeing something that ought to be obvious.

Also, I wish we would all stop repeating kindergarten-level financial “analyses” like claiming “GM loses $7,500-9,000” on each Bolt EV. That’s obviously lumping sunk costs (including development and tooling-up) in with ongoing costs, and obviously the ratio of sunk costs to ongoing costs will change over time. At best, such kindergarten-level estimates can only guess how many years the model will stay in production.

Even simplified discussions of profit-and-loss in the automotive industry should try to make a clear distinction between sunk costs and ongoing costs.

Doggydogworld

The 7000/Bolt loss (base model) spreads sunk costs over estimated lifetime production.

BoltEV (was SparkEV)

Then the argument is that more they make, less they’ll lose. Yet they are not selling wider market overseas and Korea is still completely sold out. Losing more money while demand is present makes no sense. But then, this is GM we’re talking about.

Doggydogworld

It’s not being built for less than 35k.

Some of the estimates included in the average were very stale. Analysts who updated in the past 30 days were close on revenue but too high on expenses because Tesla’s own guidance was too high on expenses.

antrik

The UBS analysis actually estimated a positive margin (IIRC $3,000) on the Bolt — the net loss is because of fixed costs.

BillT

I am happy to have contributed to this with my Model 3 purchase last month.

ranss12

Many potential Tesla auto purchasers, who have held off buying because of the fear of owning an orphan car, will now go forward with their purchase since the bankruptcy scenario has been put to rest. Demand for the Model 3 should skyrocket now.

David Cary

Interesting thumb down. In the wake of the 420 scandal, even my wife asked me if Tesla was going down. She hasn’t asked that since 2014 but that was only because I was spending a lot of money on an S.
Just Monday at work, a potential buyer was asking about how my battery was holding up (97% at 65k miles).
People here may have complete confidence in all these things. but the majority of US including people at income levels that are buyers do not. They will not buy a car that will be orphaned or a battery that will have problems.
I venture to say — the vast majority. Yes – demand will increase as it does every day as people see them everywhere.

Making a profit that isn’t pennies – that is priceless for many consumer’s confidence.

Milfan

They successfully reduced the delivery time from factory to customer from 30 days in August to 20 days in September.
Target in Q4 is to reduce it to 10 days. Wow.
But to Europe, China, its going to take more time.

Tesla also offered help to other automakers to user their superchargers, but they refused. Just headweight.

Do Not Read Between The Lines

That 20 days probably hides some California rush.
But this quarter should be interesting to see how well they resolve the delivery challenges. Some of their organisational problems are a key reason why I didn’t bite on the MR.
Now there is nervous excitement to see whether they can hit target to deliver SR+PUP 2019Q1 or 2019Q2.

Phteven

Where did you hear about the superchargers?

Pushmi-Pullyu

Tesla has offered to share the Supercharger network with any and all other auto makers which would also support the network, right from the start. That has been reported many times. Here’s an article from 2014:

https://insideevs.com/tesla-make-supercharger-network-available-automakers/

bro1999

With 0 actual intent of moving forward with any sharing deal. Unless a company is willing to fork over a stupid amount of money.

Bunny

Did Tesla ever reply to Bollinger?

antrik

On twitter? AFAIK not. If Bollinger *properly* contacted them, most likely they got a reply — though we will likely never hear of it, unless they actually strike a deal…

antrik

I’m sure you are privy to insider information about Tesla’s actual conditions.

antrik

Most recently, during the Q3 earnings call.

Jeff

Congrats to Tesla. Let’s hope it’s the first of many quarters. They’ve finally shown that their business model can make money. I’m not a fan of Musk or Tesla, but I do want to eventually own a car that is better for the environment than an ICE car.

Milfan

If someone in your family have a car, then you can go for Nissan Leaf: $30,000; 150 mile range; 116 cu. ft. interior space with many extras built in. For long drives, you can use the other car.

No idea why its selling only 1,500 units/month in USA. But 350,000 Leafs were sold worldwide.

Do Not Read Between The Lines

Rapidgate. Proper cold weather locations. Tesla. Bolt. There’s not as much reason to buy the Leaf here. GM selling Opel/Vauxhall gave Nissan help in Europe by removing Ampera-e from that market.

David Cary

The thing about rapidgate is that no one (outside of EV zealots) should be invoking this. I like to brag about my EV mileage (130k – 6 years, family total) and I have never once double Supercharged. Our Leaf doesn’t even have QC.
Do not buy a Leaf (yet) for long distance travel. Hard stop.
Buy a Leaf in a 2 car family situation. This type of car should be 30% of all new cars in the US based on my estimation that 60% of cars are part of a 2 car family with garage in the US. So what if I am off by 10%?
If gas was $6-8 like most people who study this feel it should be, it would be a bigger no-brainer.

BoltEV (was SparkEV)

Jeff, forget the environment. Just get the best car, and that is EV (other than today’s Leaf).

antrik

Those who followed Tesla already knew that the business model can make money… Now it’s just harder to deny.

Acevolt

Can’t wait to hear how Bob Lutz spins this to be the beginning of the end!

SansIce

The haters are awfully quiet right now. What about “Tesla won’t last the year before going Bankrupt” and all of the other dribble? I guess we should enjoy a bit of silence while they lick their wounds.

Get Real

Yeah I have noticed that infinity pretend electrics has disappeared here, hopefully to never return.

BoltEV (was SparkEV)

“Tesla won’t last the century before going bankrupt” will be their new mantra.

antrik

The haters seem to fall silent for a few days whenever there is undeniably good news… Possibly letting the stock rise temporarily before replenishing their short positions, only to try to depress it again with a new barrage of FUD right after?

bro1999

Now if Tesla can rinse and repeat from this point forward, Elon doesn’t have to obsess about the shorts.

Pushmi-Pullyu

Can’t add anything significant to what others have said. It’s great to see Tesla finally deliver a quarter with strong net profits, and hopefully this is the first in a long trend!

(Oh, and a huge Bronx cheer to the FÜDsters who said Tesla would never be profitable! 😛 )

Go Tesla! Keep going Tesla!

rey

Today North America , tomorrow Europe and China and then the rest of the world , in the far distant future Mars via Space X, Go Tesla Go!
edit, OOpppss sorry , I forgot the Roadster 1 is already in space orbit.

Richard Giddens

Other matters now come into focus, like the Model Y and its design / production timetable.

Robert Weekley

Reveal, should still have its “Unveiling” on March 15th,,2019!

To all “Shorters”:
“Beware The Ides Of March!”
😭😱😳

schmucker

wow that’s insane soon they will be NZ
hopefully 😜

Phil

Where’s Bob Lutz comments from the peanut gallery now?

Xcel

He became a comedian now, like chanos.

David Cary

If only it was just fun and games….As someone who is about to be an old white male – our time has come and gone. Most of them look completely out of touch starting at the top.

John

They ditched outta here- was to be expected.

noleaf4me

The corner has been turned — long straight away ahead!!

EDSON C S FILHO

What to say now, mister Bob Lutz? Can you repeat the part that you say that you can’t see a profit for Tesla any time soon?

Another Euro point of view

I hope those profits will motivate the rest of the car industry to intensify the move towards EVs.

antrik

I suspect that might actually be a major part of Elon’s motivation for insisting that Tesla needs to show sustained profitability now…

abc132

Seems to me like Consumer Reports has a position in Tesla stock. On the very same day that Tesla comes out with earnings report, they come out with their own report saying Tesla cars are the least reliable.

I know most of you don’t read CS, and neither do I, but a lot of people do including Wall st.

Bunny

I guess laying off 9 % of your workforce and getting vendors to cut back on billing really does work, nice to see a decent profit , go Tesla!

Yves Laurin

in your face Bob Lutzer