Tesla earnings: Tech manufacturing’s big test
- Q1 revenue: $5.99 billion (+32% YoY, -19% QoQ vs. $5.8 billion expected)
- Q1 earnings: $1.24 per share (-42% QoQ vs. -$0.28 per share expected)
- Full-year guidance: Revenue and profit guidance are "on hold" due to manufacturing uncertainty, Tesla said. For now, the unexpected first-quarter profit marks the first time ever that the company has posted three consecutive quarters in the black.
The big number: Tesla still thinks it can deliver 500,000 new cars this year after reporting 88,496 deliveries in Q1, down from the previous quarter, where it delivered 112,095, but still well above production levels a year prior. Investors were happy with the news, with shares up almost 9% after hours.
People are talking: "Our new products get ramped faster and become profitable sooner," CEO Elon Musk told investors on a Wednesday earnings call. Still, the company warned that "for U.S. factories, it remains uncertain how quickly we and our suppliers will be able to ramp production after resuming operations."
Opportunities: The Model Y sedan's early 2020 rollout was the biggest bright spot in the company's earnings. "We are ahead of the schedule that we were ahead of already," Musk said. "Model Y was profitable already in its first quarter of production, something we haven't achieved with any product in the past." And despite previous high-profile crashes involving the company's autopilot features, Musk told investors that Tesla's self-driving tech is poised to eclipse competitors by "orders of magnitude," akin to Google's dominance in search engines. As ecommerce takes over the quarantined world, Musk also floated an Amazon-inspired vision for how his company might disrupt auto sales: "If you really went fast, I think you could order a car in probably 90 seconds," he said.
Threats: Uncertainty at Tesla hinges on how fast and how smoothly the automaker can get factories up and running as governments lift coronavirus lockdowns. It's an area of regulatory friction and employee anxiety that Tesla already grappled with after the delayed closing of its Silicon Valley manufacturing hub in mid-March. This month, Tesla furloughed nonessential factory workers and temporarily cut pay for all personnel but said it planned to be back up and running by May 4. This week, Bay Area governments extended shelter-in-place orders through the end of May. It is so far unclear how some special exceptions for manufacturers could apply to Tesla.
The power struggle: Wednesday's earning ended abruptly after Musk was asked about ongoing shelter-in-place orders and called the measures "facist." "Give people back their god damn freedom," he said, in line with tweets earlier in the week to "FREE AMERICA NOW." Though he emerged early in the coronavirus crisis as a skeptic of drastic government shutdowns, whether that tension boils over into spats with government officials over the reopening of Tesla's factories in affected areas could have major financial implications for the automaker in a key production period.