Tesla has sent to all its shareholders the report for the second quarter of 2020 containing the financial results but also the progress of the Californian brand in its various fields. So we’ll see what’s going on.
VERY GOOD FINANCIAL RESULTS
Despite the crisis that is still being felt in this quarter’s results due to covid-19 limited production and confinement including the closure of the Fremont plant for half the quarter, Tesla continues to make money. Indeed, Tesla wanted to highlight to its shareholders an increase in cash flow of $535 million, bringing it to $8.6 billion. This is due in part to $418 million in cash flow this quarter. Tesla is also pleased to have a positive operating margin for the fourth consecutive quarter, averaging 5% over the last year. Lower manufacturing costs driven by the manufacturing of Tesla Model Y and Model 3 in China are helping them to make a profit. They therefore believe in a successful second half of 2020 while continuing to manage their capital and manufacturing costs to be ready to respond to all scenarios.
Tesla is very pleased with the launch of production of the Tesla Model Y which, despite the confinement, has a much faster ramp than the Tesla Model 3 which took 9 months longer to reach the same weekly production. At their main plant in Fremont, Tesla therefore plans to increase annual production of the Model Y/3 from 400,000 to 500,000 cars in addition to the 90,000 Model S/Xs.
In addition, now Fremont is no longer Tesla’s only production site, as Shanghai has recently welcomed a factory and it is doing very well, as is the market in China. Indeed, the Tesla Model 3 is the best-selling electric model in China this quarter, but is also competitive against thermal sedans such as BMWs and Mercedes. This makes it possible to see with ambition the launch of production of the Model Y in this plant from 2021 in addition to the 200,000 Tesla Model 3 per year.
Finally, Tesla continues to work on the construction of the Gigafactory in Berlin, the new factories in the United States notably for the manufacturing of the Tesla Semi and the Roadster as well as on the continuous improvement of their production methods to be as profitable as possible.
In this report, Tesla also provides an update on these various technical advances during this six-month period. First of all, the recognition system for stops and traffic lights is becoming more and more efficient thanks to data collection. This system is intended to allow the car to be completely autonomous at intersections. Secondly, the software updates will continue to improve it thanks to various owner feedbacks. During this semester the user interface has, for example, been improved.
One of the big breakthroughs this quarter was the Tesla Model S’s increased range to more than 400 miles (645 km), making it the first electric vehicle to reach this milestone. Tesla now boasts twice the range of the Porsche Taycan with its Model S, and is still in the top two spots in SUV range with the Model X and Y.
TESLA ALSO ADVANCES IN ENERGY
For the first time, the Megapacks, these huge storage systems, generated profits in the second quarter of 2020, which is a big step forward even though they are very recent as they are launched in 2019. In addition, it goes with the Autobidder, a platform that maximizes energy profits for companies and individuals who store their produced energy in batteries.
Tesla continues to develop the platform in the United States and Australia, but is also beginning to roll it out in Europe.
Finally, Tesla’s solar panels were installed three times more this quarter than the previous one and thanks to a lower cost per Watt ($1.49 per Watt), they are 30% cheaper than average. This is possible thanks to several manufacturing and logistics improvements.
TESLA CONTINUES ITS DEVELOPMENT
With this report to the shareholders, Tesla wants to show them that the financial results are good and that thanks to all their investments in several areas, these will continue to improve, Tesla sets no limits.
The important thing to remember:
- Tesla continues to make money despite the crisis.
- Tesla is using its strong financial position to build manufacturing facilities around the world and increase production.
- Tesla is not resting on its laurels and continues its scientific advances, including a range of 400 miles for the first time for an electric car.