While many in the West believe the Covid-19 outbreak is gone, Shanghai was under lockdown for the most of the second quarter, which had a substantial negative impact on Tesla’s production and revenue since roughly half of the company’s vehicles are made there. However, the business managed to scrape by and turn a sizable profit. It achieved an operating margin of 14.6 percent and free cash flow that was positive by $621 million in the quarter.
At that time, Tesla was also dealing with a number of issues with its supply chain, the economy, and its workforce. Despite all of this, the company’s cash and cash equivalents increased by $0.8 billion, ending the quarter with $18.3 billion in total. Bankruptcy is a thing of the past.
Elon was discovered unconscious next to a Tesla Model 3, surrounded by bottles of “Teslaquilla,” with dried tear trails still evident on his face.
This is not a remark that looks ahead because, well, what’s the point?
Enjoy the new month! pic.twitter.com/YcouvFz6Y1
Elon Musk April 1, 2018 (@elonmusk)
(Those were simpler times.)
Here are some additional figures from the quarterly Tesla slidedeck for the financial and business nerds out there:
Operating income of $2.5 billion in GAAP terms; operating margin of 14.6% in Q2 $2.6 billion in non-GAAP net income (without SBC) compared to $2.3 billion in GAAP net income in the second quarter. GAAP Automotive gross margin in Q2 was 27.3 percent. Considering the multiple global risks and disruptions, those are outstanding results.
In Q2, Tesla’s revenue of $16.9 billion increased 42% year over year (YoY).
According to Tesla, the main elements that affected operating margin, both positively and negatively, were summarized as follows:
a rise in ASP an increase in car deliveries an increase in profit in other areas of the business Lower stock-based compensation expense, increased expenses for raw materials, commodities, logistics, and expediting, and higher fixed costs per unit in Shanghai as a result of closures a reduction in bitcoin
(Yes, I can see you slipping some bitcoin in at the bottom. That false currency investment has now proven to be a huge financial and environmental failure. See what transpires with that. The good news is that Tesla appears to be gradually ending its bitcoin journey and has dropped to 75% of its high position.)
For further information on cash money matters, see: Quarter-end cash, cash equivalents, and short-term marketable securities rose sequentially by $902 million to $18.9 billion in Q2, primarily due to free cash flow of $621 million, which was only marginally offset by loan repayments of $402 million. By the conclusion of the second quarter, we had converted almost 75% of our Bitcoin purchases into fiat money. $936M in cash was added to our balance sheet in Q2 due to conversions.
Too little financial information for you? Here’s more information in an organized spreadsheet:
Tesla has provided charts on some of this as well:
Positive news also came from the factory that followed the Shanghai gigafactory, a new gigafactory in the German state of Berlin-Brandenburg. There were made more than 1,000 electric vehicles in a single week. Even though that is not even close to the desired outcome, it is a sign of a robust production ramp-up. The factory’s gross margin is already positive.
I’ll go on to Tesla vehicle production and delivery, energy storage system production and deliveries, and solar PV production and deliveries after I’ve covered the financials. Then there is the issue of AI. Remain tuned.
head here for more if you haven’t seen enough financial information already.
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