Tesla survived the throes of the coronavirus pandemic comparatively unscathed, chalking up its fourth sequential quarterly revenue for the primary time on Wednesday.
On the power entrance, nevertheless, issues had been rather more sophisticated: Tesla reported its worst-ever quarter for photo voltaic installations however large progress in its battery enterprise. CEO Elon Musk nonetheless predicted the power enterprise will in the future rival its automobile division in scale.
However right this moment, Tesla’s backside line is all about electrical automobiles, and the non permanent halt of exercise at Tesla’s Fremont manufacturing facility attributable to native well being orders didn’t put a lot of a dent in automobile manufacturing and supply. Each figures declined 5 p.c in comparison with the identical quarter in 2019. In distinction, Q2 automobile gross sales at legacy carmakers Ford, GM and Fiat Chrysler declined by a 3rd or extra year-over-year.
The prices of manufacturing facility closures and a $101 million CEO award milestone for Elon Musk didn’t cease Tesla from reaching $418 million in free money circulation, a serious enchancment over the prior quarter. Money and money equivalents grew by $535 million to $eight.6 billion throughout the quarter.
Musk praised his workers for “distinctive execution.”
“There have been so many challenges, too quite a few to call, however they bought it accomplished,” he mentioned on an investor name Wednesday.
Musk additionally confirmed that Tesla will construct a brand new Gigafactory in Austin, Texas, 5 minutes from the airport. The two,000-acre campus will abut the Colorado River and is “principally going to be an ecological paradise,” he mentioned. The brand new Texas manufacturing facility will construct the Cybertruck, Semi, Mannequin three and Mannequin Y for the Jap half of North America. Fremont, California will produce the S and X, and make Mannequin three and Mannequin Y for the West.
Return of the Tesla photo voltaic droop
This was the primary quarter totally affected by the coronavirus response, which threw the rooftop photo voltaic business into turmoil by chopping off in-person gross sales. Different installers scrambled to shift to digital-first gross sales methods, however Tesla had already accomplished so months earlier.
Q2, then, affords a take a look at case of whether or not Tesla’s pivot to passive, on-line gross sales made it higher in a position to take care of stay-at-home orders than its friends. The opposite publicly traded photo voltaic installers haven’t but reported Q2 efficiency, however Tesla delivered its worst-ever quarterly photo voltaic figures: simply 27 megawatts. That’s a 7 p.c decline from Q2 2019, its earlier worst quarter for photo voltaic.
Musk didn’t deal with that weak efficiency in his remarks to traders, as an alternative highlighting the corporate’s late-June choice to supply the most affordable photo voltaic within the nation. “We’re the corporate to go to,” he mentioned of rooftop photo voltaic. “It’s solely going to get higher later this 12 months.”
However the gross sales droop signifies Tesla’s on-line gross sales mannequin couldn’t face up to a traditionally powerful season for residential photo voltaic.
“Each single residential installer within the nation goes to have a nasty Q2 due to the preliminary impacts of COVID in the marketplace,” mentioned Austin Perea, senior photo voltaic analyst at Wooden Mackenzie. “It is laborious to dissaggregate the impacts of COVID from their very own particular person methods.”
Tesla’s 23 p.c decline in quarter-over-quarter photo voltaic installations was not as dangerous because the anticipated Q2 decline throughout the rooftop photo voltaic business, Perea added.
On the automobile aspect, Tesla’s gross sales declined lower than main automakers. It’s potential that the identical sample will maintain for photo voltaic: a much less extreme drop than Sunrun or Vivint could possibly be claimed as a victory of types. However this quarter made clear Q2 2019 was not the underside for Tesla’s photo voltaic operation, which as soon as led the residential market as SolarCity however considerably diminished since Tesla acquired it in 2016.
Tesla presently stands in third place for residential photo voltaic installers. However No. 1 installer Sunrun mentioned this month that it’s going to purchase No. 2 installer Vivint Photo voltaic, making Tesla the second largest installer by default. That main consolidation within the rooftop photo voltaic market went unremarked upon in Tesla’s investor name.
Photo voltaic and power storage income presently equate to simply 7 p.c of automotive income. However Musk reiterated his prediction that this received’t at all times be the case. “Long run, Tesla Power will probably be roughly the identical measurement as Tesla Automotive,” he mentioned on Wednesday’s name.
The grid storage enterprise supplied extra motive for optimism: capability deployed grew 61 p.c from the primary quarter, to 419 megawatt-hours. The prepackaged, giant format Megapack product turned its first revenue that quarter.
‘Troublesome to foretell’ second half of 2020
Tesla withdrew its monetary steerage final quarter in mild of upheaval within the world economic system. It kept away from setting new steerage now.
“Though now we have efficiently ramped automobile manufacturing again to prior ranges, it stays troublesome to foretell whether or not there will probably be additional operational interruptions or how world client sentiment will evolve within the second half of 2020,” the earnings report notes.
The corporate asserted it’ll nonetheless ship 500,000 automobiles this 12 months regardless. It already has enough manufacturing capability put in to achieve that, Tesla mentioned. However with 179,387 vehicles delivered thus far, Tesla faces an uphill climb to ship extra vehicles within the second half.
Wall Road maintained its buoyant confidence in Tesla’s share worth. It closed at $1,592 earlier than the earnings announcement, and rose to $1,661 after hours.