On the night of October 22 Tesla published financial results for the third quarter of 2020 ended September 30 – financial results of the famous American manufacturer of electric vehicles once again exceeded analysts’ expectations. Elon Musk’s company remains in positive territory for the fifth quarter in a row. We chose the most important thing from the report and a conference call with investors (In short: Tesla is not just good, but very good)

Financial performance

  • Total quarterly revenue grew 45% year over year, reaching a new all-time high of $ 8.771 billion… Compared to the result of the previous quarter ($ 6.036 billion), the indicator has improved by 45%.

  • As before, most of the revenue comes from the main automotive business – its share reached 87% of total revenue – $ 7.611 billion, which corresponds to growth in both annual (42%) and quarterly (47%) terms.
  • Automotive gross margin, an important indicator for investors, was 27.7% against 25.4% a quarter earlier and 22.8% last year. At the end of the quarter, all areas of Tesla’s business were able to increase revenue. The division of energy production and storage systems of Tesla Energy (solar panels and accumulators) for the year increased its revenue from $ 402 to $ 579 million. According to Elon Musk’s plan, sometime in the future Tesla Energy should catch up with Tesla Automotive in revenue, but now it seems to be something unreal. Services brought in $ 581 million against $ 548 million a year earlier.
Profit for the fifth quarter in a row (record $ 331 million) and approaching production volumes of 1 million cars: the main thing from Tesla's quarterly report

  • As mentioned above, Tesla ended another fiscal quarter with a net profit – the fifth consecutive profitable quarter and the ninth profitable quarter in the company’s history. Profit amounted to a record $ 331 million ($ 874 million non-GAAP) versus $ 143 million a year earlier and $ 104 million in the second quarter of 2020. There is little doubt that 2020 will be the first profitable year in Tesla history.
Profit for the fifth quarter in a row (record $ 331 million) and approaching production volumes of 1 million cars: the main thing from Tesla's quarterly report

  • Tesla sold so-called ZEV credits (zero-emission vehicle) for $ 397 million in the third quarter – less than in the previous quarter ($ 428 million). Let us remind you that these are “pure” subsidies from other car manufacturers that do not fit into environmental standards (standards for carbon dioxide emissions for the entire vehicle fleet of a particular manufacturer per year). EU legislation allows for the “amalgamation” of fleets of different manufacturers and companies that do not fit into the norm can avoid large fines by buying quotas from those who produce ecological cars in excess.
  • Tesla’s free cash flow deducted from operating cash flow capital expenditures increased to $ 1.395 billion, and cash and cash equivalents reached $ 14.531 billion, an increase of as much as $ 5.9 billion.
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  • After the publication of reports Tesla shares rose 3.23% to $ 436 per share.

Car supply

  • We studied the report on car deliveries in detail at the beginning of the month – at the end of the quarter, the company set a new record, having shipped almost 140,000 vehicles.
  • Auto delivery plan for full year 2020 remains the same – 500 thousand cars. Since the beginning of the year, Tesla has shipped about 318,350 cars. In the last quarter, the company expects to ship 200 thousand cars… For comparison, for the entire 2019 Tesla delivered 367,500 cars. The animation below provides a visual representation of how Tesla’s vehicle sales have grown since 2008.
  • Tesla recently upgraded its Fremont main plant (which makes Model 3, Model S, Model X and the latest Model Y) to increase Model 3 and Model Y production from the previous 400,000 to 500,000 a year. The new equipment (read: Giga Press units) is already in use and the company plans to reach full capacity by the end of the year. Including Model S and Model X assembly lines, the total plant capacity is 590 thousand cars per year. The capacity of the Phase 1 line for assembling Model 3 at the Shanghai Gigafactory 3 is 250 thousand vehicles per year. That is, the total capacity of both existing Tesla plants is already 840 thousand. Right now, the manufacturer is completing the adjustment of the second Phase 2 workshop for assembling Model Y at Gigafactory 3 – sales of Chinese Model Ys should begin before the end of the year. In other words, Tesla is one step away from reaching production volumes of 1 million vehicles per year. The company originally planned to achieve this goal in 2020.

Power Business and Supercharger Fast Charging Station Network

  • Powerwall and Industrial Powerpack Home Battery Shipments Reach Record 759 MWh (growth by 81% in quarterly terms and by 59% in annual terms). This includes the supply of the industrial Tesla Megapack, a new battery with a capacity of up to 3 MWh to create huge energy storage facilities.
  • Solar panel shipments reached 57 MW, up 111% from the second quarter and 33% from last year.
  • The global network of Tesla Supercharger fast charging stations increased to 2,181 units (an increase of 32%), and the number of connection points – to 19,437 units (an increase of 33%). In Ukraine, Supercharger stations can not be expected until 2022.

Plans

  • The construction of the European Tesla Gigafactory 4 in Brandenburg, Germany and the new American Gigafactory 5 in Texas is progressing very rapidly. The Gigafactory 4 plant should start working as early as 2021, with the Model Y assembly line being commissioned first, followed by Model 3 production. Gigafactory 5 will produce Cybertruck, Model Y crossovers and Model 3 sedans for the US East Coast, as well as Tesla Semi tractors. The Model Y line at Gigafactory 5 should also be operational in 2021.

  • The first deliveries of the hotly anticipated Cybertruck armored trucks are planned for the end of 2021, but mass sales will start only in 2022. In a conference call after the report, Musk mentioned that since the first presentation of the armored truck in November 2019, the company has made many design improvements. Back in the summer, analysts reported that the volume of pre-orders for Cybertruck exceeded 650 thousand units.
Profit for the fifth quarter in a row (record $ 331 million) and approaching production volumes of 1 million cars: the main thing from Tesla's quarterly report
  • The first Tesla Semi deliveries will also begin in 2021.
  • On September 23, at Tesla Battery Day (all announcements – here), the company introduced new 4680 batteries, which will reduce the price of the battery pack by 56% per kWh of capacity compared to the current price, making it possible to produce a production Tesla car worth $ 25 thousand (it should enter the market in the next three years). More new elements are incredibly durable – recent research pointed out for a resource of 3.2 million km.
Profit for the fifth quarter in a row (record $ 331 million) and approaching production volumes of 1 million cars: the main thing from Tesla's quarterly report
  • On October 20, Tesla began limited beta testing of the next major Full Self-Driving (FSD) autopilot update, in which the system’s software was completely redesigned. A broader beta test of the new autopilot is due to kick off in the coming weeks, with a final launch in the US slated for mid-December. With the release of this update, Tesla’s Autopilot proprietary system will grow to the highest level 5, and the company’s cars will be able to move independently without the help of a driver. The launch of the promised Tesla Network robotic taxi service with 1 million self-driving cars, which the company originally planned to launch in 2020, will depend on the implementation of full Full Self-Driving. So far, there are no updates on the launch dates for the Tesla Network robotic taxi service. But there are first impressions from users who managed to test the new Tesla autopilot.

Below is Tesla’s full Q3 financials and recording of a conference call with investors.

TSLA-Q3-2020-Update by Fred lamert

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