Tesla CEO Elon Musk offered investors an optimistic Q1 earnings report, including a first-ever GAAP operating profit for the period.
As other automakers tersely offer up first quarter earnings results that were well below what was predicted even as recently as the end of February, Tesla’s report is sprinkled with optimistic thoughts and positive results — starting with a first-time ever GAAP operating profit in the first quarter.
The company reported a $283 million in operating income on revenue of $5.99 billion for Q1 — good for 154% and 32% increases year over year, respectively. The results came to a 4.7% operating margin. On a bottom-line basis, Tesla took home $16 million in net income on a GAAP basis, which it didn’t even use for net income last year at this time. All of the aforementioned numbers are GAAP results, which is the industry standard.
While other automakers are bulking up their cash positions to ride out the pandemic, Tesla’s cash and cash equivalents increased $1.8 billion from last quarter, pushing its total to $8.1 billion. The company raised $2.3 billion recently, but spent $895 million as it ramped up deliveries of its new Model Y small SUV.
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The Model Y, shown here at its debut, began rolling off the production line at Tesla’s Fremont, California plant during the first quarter.
While the tenor of Tesla’s earnings report is certainly upbeat, the EV maker suggests that it would have been significantly better had it not been for the impact of the coronavirus pandemic on its U.S. operations.
“Despite the expiration of various government incentives at the end of last year, Q1 was pacing to be the strongest quarter of deliveries until our operations were interrupted in March,” the company wrote to shareholders.
“As a result, we remain confident in growing global production capacity as quickly as possible. WE are continuing to significantly invest in our product roadmap, including improvements in technology, as well as localizing production in Shanghai and Berlin.”
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The company produced 102,672 total vehicles in Q1, which was a 33% increase compared with the year-ago period. Not surprisingly its down compared with last quarter, but only 2% and that was attributable to S and X production, which fell more than 2,500 units. Deliveries to customers were up 40% on a year-over-year basis; however, 21% compared with Q4 2019. Currently, the company has a very lean 20-day supply of vehicles in inventory.
Tesla will begin deliveries of its Semi in 2021, the company revealed.
Despite the bright-eyed report for the quarter, Tesla officials did offer a more realistic perspective on what they – and the rest of the industry – could be facing for the rest of the year. “It is difficult to predict how quickly vehicle manufacturing and its global supply change will return to prior levels,” the company wrote.
“Due to the wide range of potential outcomes, near-term guidance of net income and free cash flow would likely be inaccurate. WE will again revisit our 2020 guidance in our Q2 update.” Officials then revealed that despite being unwilling to offer guidance, they expect Tesla will “achieve industry leading operating margins and profitability with capacity expansion and localization plans underway.”
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The company noted that Model 3 production at Gigafactory Shanghai was progressing well, and that the company was now focusing making sure the Model Y production line there – and in Germany where the plant is under construction – remain at the top of their list of priorities. Model Y deliveries will begin at both sites in 2021 and the first Tesla Semi deliveries will also start next year.