Tesla presented mixed results from the second quarter of 2019, including a shipping list of 95,356 electrical vehicles and record deployments of its own energy storage products.
However, Tesla’s solar business has turned into a shadow of its former self, and also the company’s worse-than-expected loss spooked investors on Thursday.
The company ended the quarter with $5 billion in cash and cash equivalents, putting it at a”comfortable” position to start Model 3 generation in China and Model Y production from the U.S., according to the company’s investor letter.
Auto gross margin was down slightly, but this was”in spite of reductions in vehicle [average selling price] and lower regulatory charge earnings.”
Tesla CEO Elon Musk noted that Motor Trend just celebrated the Model S for its”cultural and vehicular impact,” while the Model 3 was again the best-selling premium car from the U.S.
Musk said the EV pioneer is”close” to self-funding, including it expects to break even in Q3 and make a profit in Q4.
Analysts expected a loss of 40 cents per share, but Tesla disappointed using an adjusted loss of $1.12 per share in Q2. Last quarter, Tesla also missed revenue estimates on its way to losing $702 million.
And these results are on the heels of a number of automobile price cuts that might have invigorated sales at the expense of profits.
Tesla shares dropped more than 12 percent in early trading on Thursday, to around $230.
Shanghai mill, Europe mill, Model Y
Tesla expects to start production of a simplified, more cost-effective version of its Model 3 in Shanghai, China”at the close of the calendar year,” while starting Model Y production”by collapse of 2020″ at Fremont, California.
He’s optimistic about this particular model, saying,”Due to the massive market size for SUVs, as well as higher ASPs, we believe Model Y will probably be a more profitable product compared to Model 3″
Tesla is also accelerating its European Gigafactory efforts and is”hoping to finalize a location choice in the coming quarters.”
Tesla added 101 vehicles to its mobile service fleet and opened 25 new store and service locations.
The persistent decline of Tesla solar
Tesla’s solar business plummeted to some startlingly small 29 megawatts at Q2, down from 47 megawatts last quarter and a far cry from the 253 megawatts installed by SolarCity in the boom days of Q4 2015.
Tesla said,”We’re in the process of improving many aspects of this business to increase deployments,” however this solar free drop in a modest growth marketplace looks like a willful curtailment of its business.
As GTM reported, Tesla was the unquestioned leader in the residential rooftop market with a market share of around 33 percent, but today, the company is No. 3, and its market share during the first quarter was a little more than 6 per cent, according to analysts in Wood Mackenzie Power & Renewables.
WoodMac forecasts nearly flat 3 percent growth for its residential solar marketplace in 2019.
However, as Austin Perea, a senior solar analyst in WoodMac, noted in an earlier interview,”At the same time Tesla’s market share has faltered, its customer-acquisition costs have dropped.”
At the second half of 2018, the company was spending $0.40 per watt to acquire customers. That compares well with Vivint’s and Sunrun’s customer-acquisition costs at $0.94 per watt and $0.90 a watt, respectively.
Musk has said that the solar roof product is currently on”version 3,” though one would be hard-pressed to find a roof with version 1 or 2.
Three years after its introduction, after having obtained deposits from interested homeowners, Tesla has connected on just a dozen or so solar-integrated roofs to the grid. Tesla plans to ramp up the creation of this solar roof with”significantly improved manufacturing capabilities during 2019.”
Electrek obtained a price quote last month, along with diagrams of the expensive and lovely solar roof tiles. Tesla did not provide an update on the production of the solar roof in the Buffalo, New York mill and the 1,460 jobs the company has pledged to create there by next year.
The author of this article received a call from a”Janis” in Tesla per month past, letting me know that I could purchase and put a $1,000 down payment to solar roof tiles directly from the business website. Janis said that, after supplying some basic home info, the website could generate a cost quote to the roof tiles. She noted that just the textured tile alternative was available at the moment.
She also said that the cost quoted was likely to be 40 percent to 50 percent lower than the true cost.
There was some positive news about Tesla’s storage business: Powerwall and Powerpack installation grew by 81 percent from the second quarter to a record 415 megawatt-hours. Powerwalls are installed in over 50,000 locations.
The investor correspondence states,”Additional cell supply together with our brand new module line designed by Tesla Grohmann allowed a step change in energy storage production.” Tesla’s letter from last year claims”a better supply of cells and new manufacturing equipment” will grow storage deployments into”over 2 gigawatt-hours in 2019″ with growing profitability.
Guidance along with other Tesla nuggets
Some other takeaways in the telephone:
Tesla co-founder and CTO JB Straubel is transitioning to an advisory, nonoperational function after about 16 years at the automaker.
Model 3 typical selling price is stable at approximately $50,000.
CFO Zach Kirkhorn (in April) pledged a return to profitability by the third quarter.
During Wednesday’s call, Musk said:”I think it’s difficult for people to genuinely feel an exponential. We didn’t evolve to sense exponential, we can feel linear, but we could just understand an exponential in a cognitive level. But Tesla is expanding at an exponential pace.”
Musk is standing behind his contentious guidance of 360,000 to 400,000 automobile deliveries for this year — but it’s likely to be a struggle. It’s a jump of 45 percent to 65 percent compared to last year.
The firm has delivered just 158,000 units in the first half of this year. That means that the Fremont mill is going to have to deliver about 100,000 vehicles per quarter in Q3 and Q4 — and also much more records might need to be broken.
Tesla expects its 2019 capex to be approximately $1.5 billion to $2 billion, a decrease from previous advice.
The S&P 500 index is up 19 per cent for the year.
