Tesla Third Quarter 2016 Update
• GAAP net income of $22 million and positive free cash flow of $176 million
• Record vehicle production, deliveries, and revenue
• GAAP gross profit per car increased significantly from Q2 to Q3
• Long-term debt reduced and liquidity increased to support future growth
• Every new Tesla produced now comes with hardware for self-driving
• Dramatic improvement in Model X reliability
• Model 3 on plan for volume deliveries in second half of 2017
Tesla reports a great third quarter 2016 performance! Production of cars was up 37% from Q2 and up 92% from Q3 last year. New products like the hardware for full autonomy, improved Autopilot software, and the big 100kWh battery will keep sales strong as they continue to prepare for "volume production" of the Model 3 in the second half of 2017. (
Not just a few M3’s by the end of December; Musk has previously tweeted that most folks who stood in line at stores to preorder their cars should have them by the end of 2017.) Progress in the last few months makes Musk more confident of a production start in "mid 2017" rather than "late 2017."
Tesla makes a profit margin of between 20 to 30 percent on each car they make, and the margin for each model is improving. But the company as a whole rarely shows a profit because Musk takes that money and pours it into R&D and cap ex (capital expenditures) like the Freemont factory and the battery gigafactory, so he can make even more cars and more profit in the future.
Belief in the Tesla business is strong enough that the company obtained additional lines of credit for leasing cars and warehouses at very good rates, which allowed them to pay down some debt, and obviate the need for the big cash raises this fall that Musk had previously warned about.
Q4 2016 may also show a slight profit (“despite ZEV credit sales in Q4 likely being negligible”), with SolarCity revenue roughly neutral, per Musk. (Musk, from the conference call: SolarCity is "Not a cash cow; more of a cash vacuum.") October 28th will see a big
product demonstration event to unveil an integrated solar roof with next-generation energy storage and EV charging.
The Q3 2016 letter to shareholders is at this link: http://files.shareholder.com/downloads/ABEA-4CW8X0/2564229359x0x913801/F9E5C36A-AFDD-4FF2-A375-ED9B0F912622/Q3_16_Update_Letter_-_final.pdfYou can listen to a recording of the conference call webcast here: http://ir.tesla.com/events.cfmMore analysis from Electrek:
Tesla (TSLA) announces Q3 financial results beat expectations, first GAAP profit in 3 years – $22 million [shareholders letter]
https://electrek.co/2016/10/26/tesla-tsla-announces-q3-financial-results-beat-expectations-and-make-a-profit-of-22-million-shareholders-letter/Elon Musk reveals his 3 priorities at Tesla: Model 3, Self-Driving Autopilot, and 100 kWh battery
https://electrek.co/2016/10/26/elon-musk-reveals-3-priorities-tesla-model-3-self-driving-autopilot-100-kwh-battery/Tesla Model 3 progress: production line layout completed, Tesla now testing subsystems
https://electrek.co/2016/10/26/tesla-model-3-progress-production-line-layout-subsystems/Tesla Model 3: Tesla is now holding close to $700 million in customer deposits
https://electrek.co/2016/10/27/tesla-model-3-700-million-customer-deposits/Poor old Bob Lutz, formerly of GM, just can't understand how a small upstart company making electric (!) cars can threaten the 100-year-old behemoth that is GM. And thus affect the price of all his GM stock....
Tesla/Musk attacked by ex-GM boss Lutz again, spreading misinformation ahead of earnings
https://electrek.co/2016/10/26/tesla-elon-musk-attacked-by-gm-bob-lutz-again-misinformation-earnings