tsla-8k_20181024.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

October 24, 2018

 

Tesla, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

Delaware

 

001-34756

 

91-2197729

(State or other jurisdiction of

incorporation)

 

(Commission File Number)

 

(IRS Employer

Identification No.)

3500 Deer Creek Road

Palo Alto, California 94304

(Address of principal executive offices, including zip code)

(650) 681-5000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 


Item 2.02Results of Operations and Financial Conditions.

 

On October 24, 2018, Tesla, Inc. released its financial results for the quarter ended September 30, 2018 by posting its Third Quarter 2018 Update letter on its website. The full text of the letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

This information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing 


Item 9.01Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.

Description

99.1

Tesla, Inc. Third Quarter 2018 Update Letter, dated October 24, 2018.

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

TESLA, INC.

 

 

By:

 

/s/ Deepak Ahuja

 

 

Deepak Ahuja

Chief Financial Officer

Date: October 24, 2018

 

 

 

tsla-ex991_6.htm

Exhibit 99.1

 

Tesla Third Quarter 2018 Update

 

    GAAP net income of $312M, non-GAAP net income of $516M

    Operating income of $417M and operating margin of 6.1%

    Free cash flow of $881M supported by operating cash flow of $1.4B

    $3.0B of cash and cash equivalents at Q3-end, increased by $731M in Q3

    Model 3 GAAP and non-GAAP gross margin > 20% in Q3

    Reaffirm expectation of continued GAAP net income and free cash flow in Q4

 

 

Q3 2018 was a truly historic quarter for Tesla. Model 3 was the best-selling car in the US in terms of revenue and the 5th best-selling car in terms of volume. With average weekly Model 3 production through the quarter (excluding planned shutdowns) of roughly 4,300 units per week, we achieved GAAP net income of $312 million. We also delivered on our internal cost efficiency targets, leading to GAAP Model 3 gross margin of more than 20%, which exceeded our guidance. Finally, our total cash increased by $731 million and we had free cash flow (operating cash flow less capex) of $881 million despite less than 10% of that amount coming from key working capital items (payables, receivables, and inventory).  

 

Model 3 is attracting customers of both premium and non-premium brands, making it a truly mainstream product. We are thankful to our customers for being such strong advocates of our products and mission.

 

 

AUTOMOTIVE PRODUCTS

The Model 3 production system stabilized in Q3. We went from a steep S-curve to more gradual monthly improvements.  Among other things, we made the changes necessary to enable production of an All-Wheel Drive (AWD) version of Model 3, and we did this without disrupting our production rate.  We started the quarter producing only Rear Wheel Drive (RWD) Model 3s and ended the quarter producing almost entirely AWD cars. Even though AWD cars are significantly more complex to build, we produced 5,300 Model 3s in the last week of Q3.

 

Labor hours per Model 3 decreased by more than 30% from Q2 to Q3, falling for the first time below the level for Model S and X. In Q4, we will focus even further on cost improvements while continuing to increase our production rate.  

US Passenger Car sales in Q3

 

US vehicle inventory – Days of sales

Vehicle delivery and logistics were our main challenges in Q3 as our delivery system went through a similar “ramp” to what our production system went through in Q2. Fortunately, these challenges are easier to solve than vehicle manufacturing, and we made improvements through the quarter. One of the most significant improvements was the expansion of direct deliveries where our employee delivers the car wherever the customer would like. We believe delivering vehicles to the front door of a customer’s house or office is superior from both a cost and customer satisfaction perspective.

 

Despite logistical challenges earlier in the quarter, our US inventory at the end of Q3 (including customer vehicles in transit, test drive vehicles, service loaners and engineering fleet – all of which accounted for the vast majority of our inventory) remains the lowest in the industry when measured in terms of days of sales. Even when compared to our own history, our vehicle inventory level at the end of Q3 was the lowest in over two years in terms of days of sales.

 



 

In Q3, we delivered 56,065 Model 3s to customers. Based on trade-ins received from customers since the start of Model 3 production, more than half of those trade-in vehicles were priced below $35,000 when new. It is clear that customers are trading up their relatively cheaper vehicles to buy a Model 3 even though there is not yet a leasing option and the Q3 starting price of a Model 3 was $49,000. This leads us to believe that the total market potential for Model 3 is larger than just the premium sedan market. Additionally, we are working hard to bring down the price of Model 3 to $35,000. We have taken a step forward by recently introducing a medium range version that has a 260-mile EPA estimated range and a starting price of $46,000.  Better than expected Model 3 cost reduction is allowing us to bring more affordable options to the market sooner.  

 

We stopped taking Model 3 reservations in North America in early July 2018 when we moved to a direct order system. Of the 455,000 net reservations that we reported in August 2017, less than 20% have cancelled. We are expecting most of the remaining reservations to gradually convert to orders as we launch more versions of Model 3, introduce other financing options, and begin sales outside North America.

Original purchase price of Model 3 trade-ins

 

The mid-sized premium sedan market in Europe is more than twice as big as the same segment in the US. This is why we are excited to bring Model 3 to Europe early next year. The reception at the Paris Auto Show as well as the Goodwood Festival of Speed was very strong. We expect to start taking orders in Europe and China for Model 3 before the end of this year.  

 

Given the growth of Model 3, we delivered almost 70,000 vehicles in the US in Q3. Although we only sell Model 3, Model S and Model X, our total US deliveries in Q3 were on par with total vehicle deliveries made by our long-established premium competitors, each of which has multiple models and a vast network of dealerships.  

 

In order to significantly increase the affordability of Model 3, we have decided to accelerate our manufacturing timeline in China. We are aiming to bring portions of Model 3 production to China during 2019 and to progressively increase the level of localization through local sourcing and manufacturing. Production in China will be designated only for local customers.  

 

Model S/X gross margin vs.

Performance mix

Model 3 mix was strong in Q3 due to the launch of AWD and Performance variants.  While the average selling price will gradually decline as we introduce lower priced variants, we are not expecting this to impact profitability. Model S and X Performance mix declined roughly 4-fold since 2015, yet Model S and X gross margin (excluding ZEV credits) continued to improve by roughly 600 basis points over the same period of time. Margin growth was caused by gradual cost improvements driven by lowering labor hours per vehicle, reduced cost of raw materials, and various other cost efficiencies. We continue to target a 25% gross margin ex-ZEV credits on Model 3.

 

In Q3, we delivered 27,710 Model S and X vehicles to customers. While demand in China remains challenging due to a 40% import duty for Model S and X, China deliveries still remained a material portion of our Q3 deliveries, and we managed to offset the decline there with growth in North America and Europe.  

 

Electric vehicles that are designed from the ground up to be electric are structurally safer than equivalent combustion engine vehicles.  That is why we were excited to confirm earlier this month that Model 3 received a 5-star rating from NHTSA in every category and sub-category. We continue to improve both the hardware and software on our cars so that our customers immediately get the best of what we have to offer without waiting for a new model year.  

 

Battery pack and powertrain are at the heart of our vehicles. Over the past 15 years, we have worked hard to make the best powertrain anywhere on the market.  By 2016, Model X energy efficiency was 3.1 miles of EPA range per kWh. This is an extremely important metric as it allows an EV to reach a long EPA range even when using a relatively small, inexpensive battery pack. With Model 3, energy efficiency improved dramatically to 4.1 EPA miles per kWh, the highest efficiency for any all-wheel drive EV. To put this in context, our current or upcoming AWD (2019) competition is expected to achieve 2.4 to 2.8 miles of EPA range per kWh. Model 3 has far better energy efficiency while also providing the quickest acceleration (0-60 mph in as little as 3.3 seconds) and the highest top speed (155 mph). Additionally, the curb weight of Model 3 long range RWD is only 3% heavier than its gas powered equivalents.

 



 

We recently started releasing Version 9.0 of our vehicle software, which marks our biggest software upgrade in the last two years. Our Autopilot software is now much improved, and, as a result, we can start adding new functionality that was not possible in the past. The main functionality we added to our early access users is “Navigate on Autopilot” where on most controlled-access roads such as highways, any Tesla vehicle made from October 2016 with Enhanced Autopilot will be able to automatically change lanes with driver confirmation, transition from one freeway to another, and ultimately exit the freeway when approaching the final destination. We also enabled long-awaited dashboard camera functionality as well as some Atari games when a vehicle is parked. This new software architecture will enable us to accelerate deployment of new Autopilot and Self-Driving features in the future.

 

During Q3, we opened four new store and service locations, resulting in 351 locations worldwide at the end of the quarter. Our electrified Mobile Service fleet continued to grow further to more than 373 service vehicles on the road at the end of Q3. Since body repairs have been one of the major drawbacks for our customers, we have started to roll out our own body shops in the US. Thus far, we have opened several body shops in the highest density areas and are planning to open dozens more in the next few quarters.

Total Tesla fleet with Autopilot hardware

 

In Q3, we opened 44 new Supercharger locations for a total of 1,352 Supercharger stations. To date, we have over 11,000 Supercharging connectors and over 20,000 Destination Charging connectors globally.  

 

 

ENERGY PRODUCTS

 

Our energy business is also going through significant changes that led to higher revenues and significantly better profitability.  

 

In Q3, energy storage deployments grew to 239 MWh, an increase of 18% sequentially and 118% compared to Q3 2017. This means that we are well on track to achieve our goal of tripling energy storage deployments in 2018 compared to 2017.  We increased Powerwall production so that we can continue to work through our order backlog. We also rolled out new software features for Powerwall, including Time Based Control and Storm Watch (full Powerwall recharge in case of a storm forecast), to continue to bring additional value to our customers.

 

MWh of Energy Storage deployed

(12-months rolling)

We deployed 93 MW of solar energy generation systems in Q3, an 11% increase sequentially. Cash and loan sales made up 80% of residential deployments in the quarter, up from 46% in Q3 2017. Due to the complexity of Solar Roof, we continue to iterate on the design of the product via intensive reliability testing, and we also continue to refine the installation process. Accordingly, we expect to ramp production more quickly during the first half of 2019.  

 

We are prioritizing residential solar installations that are combined with our energy storage products because this combination provides a better customer experience and improves both our revenues and profits. As a result of greater scale, manufacturing efficiencies and improvements in our installation processes, our energy storage gross margin improved materially in Q3.

 

We have significantly improved the time to install our solar and energy storage products and customers will continue to see faster installation. Though solar energy economics continue to improve every year, one of the remaining gating factors has been customer acquisition costs. Following adjustments to our sales channel strategy earlier this year, a majority of our new solar energy orders now comes from our own website and stores rather than through third-party channels. This has helped us to significantly lower our customer acquisition costs. At the end of Q3, there were almost 450,000 Tesla vehicle owners around the world. Ultimately, we believe this group will become the largest demand generator for our residential solar and Powerwall business.

 

 

 

 



Q3 2018 RESULTS

 

Revenue & Gross Margin

 

 

Three Months Ended

 

 

Change

 

 

September 30,

 

 

June 30,

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

 

2018

 

 

2018

 

 

 

 

2017

 

 

QoQ

 

YoY

 

Automotive revenue ($000)

$

6,098,766

 

 

$

3,357,681

 

 

 

 

$

2,362,889

 

 

 

82

%

 

158

%

Automotive gross margin – GAAP

 

25.8

%

 

 

20.6

%

 

 

 

 

18.3

%

 

 

522

bp

 

752

bp

Automotive gross margin excluding SBC

   and ZEV credit – non-GAAP

 

25.5

%

 

 

21.0

%

 

 

 

 

18.7

%

 

 

453

bp

 

681

bp

 

 

 

Automotive revenue in Q3 increased by 82% sequentially over Q2, mainly due to a sharp increase in Model 3 deliveries. In Q3, we recorded $52M in ZEV credit sales compared to zero in Q2.  

With the adoption of the new revenue recognition standard starting January 1, 2018, lease accounting generally applies to vehicles directly leased by us without using bank partners. Only 3% of vehicles delivered in Q3 were subject to lease accounting.  

GAAP Automotive gross margin improved significantly to 25.8% in Q3 from 20.6% in Q2, while non-GAAP Automotive gross margin improved to 25.5% in Q3 as compared to 21.0% in Q2.  

At an average Model 3 production rate of about 4,300 per week in Q3 (excluding planned shutdowns), Model 3 gross margin grew very significantly to above 20%. The mix of the Model 3 Performance version was only slightly higher than the Performance mix of Model S and X. This strong margin growth was driven by a higher production rate while keeping fixed costs stable, significant reductions in manufacturing costs through lower labor hours per unit, lower scrap rate, lower material costs, and higher average selling price.

Gross margin of Model S and X continued to improve sequentially even though the average selling price per vehicle declined slightly. Model S has been in production for over six years, but we continue to achieve efficiencies in material cost and other manufacturing costs.

 

 

Three Months Ended

 

 

Change

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

 

 

 

 

 

 

 

2018

 

 

2018

 

 

2017

 

 

QoQ

 

YoY

 

Energy generation and storage revenue ($000)

$

399,317

 

 

$

374,408

 

 

$

317,505

 

 

 

7

%

 

26

%

Energy generation and storage gross margin

 

17.2

%

 

 

11.8

%

 

 

25.3

%

 

 

543

bp

 

-804

bp

 

Energy generation and storage revenue in Q3 increased by 7% over Q2 and by 26% compared to Q3 2017. This year-over-year increase was mainly driven by a substantial growth in energy storage deployments and higher mix of cash and loan sales for solar deployments.

GAAP gross margin of the Energy business in Q3 improved significantly to 17.2% compared to 11.8% in Q2 mainly due to cost improvements in our solar and storage businesses.  

 

 

Other Highlights

 

Service and Other revenue in Q3 increased by 21% compared to Q2. This was mainly due to higher used car sales.

Service and Other gross margin loss in Q3 was less than in Q2. Total gross loss of Service and Other remained relatively stable.  This was in line with our expectations.  

Our total GAAP operating expenses decreased to $1.11 billion in Q3, which was 11% less than in Q2.  Excluding one-time restructuring and other costs, operating expenses decreased by 5% sequentially as we are seeing the benefit of our ongoing cost reduction efforts.

Interest and Other expenses were $145 million in Q3.  

There were approximately 171 million basic shares outstanding at the end of Q3.  

 

 

Cash Flow and Liquidity

 

Cash flow from operating activities in Q3 was $1.39 billion. This was mainly due to significantly improved volumes and profitability of Model 3. Change in key working capital items (receivables, payables and inventory) during Q3 impacted operating cash flow only slightly. Although our accounts payable increased as expected, our accounts receivables also increased by a similar magnitude since the quarter ended on a Sunday, which limited our ability to collect cash from the banks financing our customer loans.

Customer deposits decreased slightly compared to Q2 to $906 million as we continue to work through our Model 3 backlog.

Our capital expenditures were $510 million, which was below the Q2 2018 level.

Our cash position increased by $731 million in Q3 despite repaying $82.5 million of bonds.


OUTLOOK

 

Model 3 quarterly production and deliveries should continue to increase in Q4 compared to Q3. Our target of delivering 100,000 Model S and X vehicles this year remains unchanged.  

 

We expect gross margin for Model 3 to remain stable in Q4 as manufacturing efficiencies and fixed cost absorption offset a slightly lower trim mix and the negative impact of tariffs from Chinese sourced components. Gross margin for Model S and X will likely decline slightly in Q4, as we expect that the sequential increase in tariffs in Q4 from Chinese sourced components will be only partially offset by increased manufacturing cost efficiencies. For all three vehicles, additional tariffs in Q4 on parts sourced from China will impact our gross profit negatively by roughly $50 million.

 

Energy generation and storage revenue should decline slightly in Q4 compared to Q3, mainly due to seasonality of the solar business.  As a result of lower solar mix and seasonality, gross margin of this segment should also decline slightly in Q4.

 

We expect our Services and Other business to continue to grow mainly due to used car sales volumes. Gross margin of this segment should see further sequential improvement.  We will increase investment in our service infrastructure in North America through deployment of new service locations and additional mobile service vehicles.

 

Total operating expenses should grow only slightly in Q4 compared to Q3 levels.  

 

We reaffirm our prior guidance that we expect to again achieve positive GAAP net income in Q4. Similarly, in Q4, we continue to expect to generate positive cash from operating cash flows net of capital expenditures, as well as the normal inflow of cash received from non-recourse financing activities on leased vehicles and solar products. Our cash position should remain at least flat in spite of our plan to repay $230 million of convertible notes in cash during Q4.  

 

Our total 2018 capex, the vast majority of which is to grow our capacity, is expected to be slightly below $2.5 billion, consistent with our prior guidance. Our Q4 capex projection includes the purchase of land in China and initial design and other expenditures for Gigafactory 3. Interest expenses in Q4 should be roughly $170 million and losses attributable to noncontrolling interests should decline significantly compared to Q3.

 

As we have transformed from a 100,000 per year unit carmaker into a ~340,000 unit per year carmaker, our earnings profile has flipped dramatically. Sufficient Model 3 profitability was critical to make our business sustainable – something many argued would be impossible to achieve. Due to the ingenuity and incredible hard work of our team combined with an innovative vehicle design and manufacturing strategy, we have achieved total auto gross margin of ~25%.  

 

We can’t thank you enough for your support. We would not have achieved this historic quarter without it.  

 

 

 

 

 

 

 

 

 

Elon Musk

Deepak Ahuja

 

 

 

 

 

 

 

 



WEBCAST INFORMATION

Tesla will provide a live webcast of its third quarter 2018 financial results conference call beginning at 3:30 p.m. PT on October 24, 2018, at ir.tesla.com. This webcast will also be available for replay for approximately one year thereafter.

 

 

NON-GAAP FINANCIAL INFORMATION

Consolidated financial information has been presented in accordance with GAAP as well as on a non-GAAP basis to supplement our consolidated financial results. Our non-GAAP financial measures include non-GAAP gross margin, non-GAAP net income (loss) attributable to common stockholders, non-GAAP net income (loss) attributable to common stockholders on a per share basis, and operating cash flows plus change in collateralized lease borrowing. Management believes that it is useful to supplement its GAAP financial statements with this non-GAAP information because management uses such information internally for its operating, budgeting and financial planning purposes. These non-GAAP financial measures also facilitate management’s internal comparisons to Tesla’s historical performance as well as comparisons to the operating results of other companies. Management also believes that presentation of the non-GAAP financial measures provides useful information to our investors regarding our financial condition and results of operations because it allows investors greater transparency to the information used by Tesla management in its financial and operational decision-making so that investors can see through the eyes of Tesla management regarding important financial metrics that Tesla management uses to run the business as well as allows investors to better understand Tesla’s performance. Non-GAAP information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction with financial information reported under U.S. GAAP when understanding Tesla’s operating performance. A reconciliation between GAAP and non-GAAP financial information is provided below.

 

 

FORWARD-LOOKING STATEMENTS

Certain statements in this shareholder letter, including statements in the “Outlook” section; statements relating to the progress Tesla is making with respect to product and software development and ramp, such as Model 3, Autopilot and Solar Roof; statements regarding growth in the number of Tesla stores, service centers, body shops, and in other delivery, service, and repair capabilities; statements relating to the production, production rate and delivery timing of products such as Model 3 and Solar Roof and deployment of energy storage capacity; statements regarding growth of our energy business and means to achieve such growth; statements regarding growth in demand and potential customer base, conversion of reservations to orders, cross-selling opportunities and orders for Tesla products and the catalysts for that growth; statements regarding the ability to achieve product demand, volume, production, delivery, leasing, inventory and deployment; statements regarding revenue, cash generation, cash flow, gross margin, spending, capital expenditure and profitability targets; statements regarding productivity improvements and capacity expansion plans, such as for Model 3 manufacturing processes and localization of parts sourcing and manufacturing in China; and statements regarding Gigafactory 1, Gigafactory 2 and Gigafactory 3, including timing and manufacturing plans, including those related to vehicle, battery and photovoltaic cell and other production, are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: the risk of delays in the manufacture, production, delivery and/or completion of our vehicles and energy products, particularly Model 3, including internationally; the ability to design and achieve and grow simultaneous and separate market acceptance of Model S, Model X, Model 3 and their variants, as well as new vehicle models; the ability of suppliers to meet quality and part delivery expectations at increasing volumes, especially with respect to Model 3 parts; adverse foreign exchange movements; increases in international tariffs, any failures by Tesla products to perform as expected or if product recalls occur; Tesla’s ability to continue to reduce or control manufacturing and other costs; consumers’ willingness to adopt electric vehicles; competition in the automotive and energy product markets generally and the alternative fuel vehicle market and the premium sedan, premium SUV and small to medium-sized sedan markets in particular; Tesla’s ability to establish, maintain and strengthen the Tesla brand; Tesla’s ability to manage future growth effectively as we rapidly grow, especially internationally; the unavailability, reduction or elimination of government and economic incentives for electric vehicles and energy products; Tesla’s ability to establish, maintain and strengthen its relationships with strategic partners such as Panasonic; potential difficulties in finalizing, performing and realizing potential benefits under definitive agreements for Gigafactory 1 and Gigafactory 2 and future manufacturing facilities, such as Gigafactory 3, maintaining Gigafactory 1 and Gigafactory 2 implementation schedules, output and cost estimates; and Tesla’s ability to execute on its strategy for new store, delivery hub, direct delivery, service center, Supercharger and other locations and capabilities. More information on potential factors that could affect our financial results is included from time to time in our Securities and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in our quarterly report on Form 10-Q filed with the SEC on August 6, 2018. Tesla disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

 

 

 

Investor Relations Contact:

Martin Viecha

Investor Relations

ir@tesla.com

 

 

  

Press Contact:

Dave Arnold

Communications

press@tesla.com

 



Tesla, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

2018

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive sales

$

5,878,305

 

 

$

3,117,865

 

 

$

2,076,731

 

 

$

11,558,051

 

 

$

6,125,643

 

Automotive leasing

 

220,461

 

 

 

239,816

 

 

 

286,158

 

 

 

633,713

 

 

 

813,462

 

Total automotive revenue

 

6,098,766

 

 

 

3,357,681

 

 

 

2,362,889

 

 

 

12,191,764

 

 

 

6,939,105

 

Energy generation and storage

 

399,317

 

 

 

374,408

 

 

 

317,505

 

 

 

1,183,747

 

 

 

818,229

 

Services and other

 

326,330

 

 

 

270,142

 

 

 

304,281

 

 

 

859,884

 

 

 

713,168

 

Total revenues

 

6,824,413

 

 

 

4,002,231

 

 

 

2,984,675

 

 

 

14,235,395

 

 

 

8,470,502

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive sales

 

4,405,919

 

 

 

2,529,739

 

 

 

1,755,622

 

 

 

9,027,055

 

 

 

4,724,849

 

Automotive leasing

 

119,283

 

 

 

136,915

 

 

 

175,224

 

 

 

360,694

 

 

 

516,683

 

Total automotive cost of revenues

 

4,525,202

 

 

 

2,666,654

 

 

 

1,930,846

 

 

 

9,387,749

 

 

 

5,241,532

 

Energy generation and storage

 

330,554

 

 

 

330,273

 

 

 

237,288

 

 

 

1,036,190

 

 

 

592,823

 

Services and other

 

444,992

 

 

 

386,374

 

 

 

367,401

 

 

 

1,212,335

 

 

 

852,446

 

Total cost of revenues

 

5,300,748

 

 

 

3,383,301

 

 

 

2,535,535

 

 

 

11,636,274

 

 

 

6,686,801

 

Gross profit

 

1,523,665

 

 

 

618,930

 

 

 

449,140

 

 

 

2,599,121

 

 

 

1,783,701

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

350,848

 

 

 

386,129

 

 

 

331,622

 

 

 

1,104,073

 

 

 

1,023,436

 

Selling, general and administrative

 

729,876

 

 

 

750,759

 

 

 

652,998

 

 

 

2,167,039

 

 

 

1,794,210

 

Restructuring and other

 

26,184

 

 

 

103,434

 

 

 

 

 

 

129,618

 

 

 

 

Total operating expenses

 

1,106,908

 

 

 

1,240,322

 

 

 

984,620

 

 

 

3,400,730

 

 

 

2,817,646

 

Income (loss) from operations

 

416,757

 

 

 

(621,392

)

 

 

(535,480

)

 

 

(801,609

)

 

 

(1,033,945

)

Interest income

 

6,907

 

 

 

5,064

 

 

 

5,531

 

 

 

17,185

 

 

 

13,406

 

Interest expense

 

(175,220

)

 

 

(163,582

)

 

 

(117,109

)

 

 

(488,348

)

 

 

(324,896

)

Other (expense) income, net

 

22,876

 

 

 

50,911

 

 

 

(24,390

)

 

 

36,071

 

 

 

(83,696

)

Income (loss) before income taxes

 

271,320

 

 

 

(728,999

)

 

 

(671,448

)

 

 

(1,236,701

)

 

 

(1,429,131

)

Provision (benefit) for income taxes

 

16,647

 

 

 

13,707

 

 

 

(285

)

 

 

35,959

 

 

 

40,640

 

Net income (loss)

 

254,673

 

 

 

(742,706

)

 

 

(671,163

)

 

 

(1,272,660

)

 

 

(1,469,771

)

Net loss attributable to noncontrolling interests

   and redeemable noncontrolling interests

 

(56,843

)

 

 

(25,167

)

 

 

(51,787

)

 

 

(157,086

)

 

 

(183,721

)

Net income (loss) attributable to common

   stockholders

$

311,516

 

 

$

(717,539

)

 

$

(619,376

)

 

$

(1,115,574

)

 

$

(1,286,050

)

Net income (loss) per share of common stock

   attributable to common stockholders –

   basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.82

 

 

$

(4.22

)

 

$

(3.70

)

 

$

(6.56

)

 

$

(7.80

)

Diluted

$

1.75

 

 

$

(4.22

)

 

$

(3.70

)

 

$

(6.56

)

 

$

(7.80

)

Weighted average shares used in computing

   net income (loss) per share of common stock –

   basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

170,893

 

 

 

169,997

 

 

 

167,294

 

 

 

170,019

 

 

 

164,897

 

Diluted

 

178,196

 

 

 

169,997

 

 

 

167,294

 

 

 

170,019

 

 

 

164,897

 

 

 


Tesla, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

September 30,

 

 

December 31,

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

2,967,504

 

 

$

3,367,914

 

Restricted cash

 

158,627

 

 

 

155,323

 

Accounts receivable, net

 

1,155,001

 

 

 

515,381

 

Inventory

 

3,314,127

 

 

 

2,263,537

 

Prepaid expenses and other current assets

 

325,232

 

 

 

268,365

 

Total current assets

 

7,920,491

 

 

 

6,570,520

 

Operating lease vehicles, net

 

2,186,137

 

 

 

4,116,604

 

Solar energy systems, leased and to be leased, net

 

6,301,537

 

 

 

6,347,490

 

Property, plant and equipment, net

 

11,246,295

 

 

 

10,027,522

 

Goodwill and intangible assets, net

 

356,702

 

 

 

421,739

 

MyPower customer notes receivable, net of current portion

 

422,897

 

 

 

456,652

 

Restricted cash, net of current portion

 

396,835

 

 

 

441,722

 

Other assets

 

431,819

 

 

 

273,123

 

Total assets

$

29,262,713

 

 

$

28,655,372

 

Liabilities and Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

3,596,984

 

 

$

2,390,250

 

Accrued liabilities and other

 

1,990,095

 

 

 

1,731,366

 

Deferred revenue

 

570,920

 

 

 

1,015,253

 

Resale value guarantees

 

604,949

 

 

 

787,333

 

Customer deposits

 

905,838

 

 

 

853,919

 

Current portion of long-term debt and capital leases (1)

 

2,106,538

 

 

 

896,549

 

Total current liabilities

 

9,775,324

 

 

 

7,674,670

 

Long-term debt and capital leases, net of current portion (1)

 

9,672,613

 

 

 

9,418,319

 

Deferred revenue, net of current portion

 

950,126

 

 

 

1,177,799

 

Resale value guarantees, net of current portion

 

455,762

 

 

 

2,309,222

 

Other long-term liabilities

 

2,555,319

 

 

 

2,442,970

 

Total liabilities

 

23,409,144

 

 

 

23,022,980

 

Redeemable noncontrolling interests in subsidiaries

 

551,264

 

 

 

397,734

 

Convertible senior notes (1)

 

 

 

 

70

 

Total stockholders' equity

 

4,508,838

 

 

 

4,237,242

 

Noncontrolling interests in subsidiaries

 

793,467

 

 

 

997,346

 

Total liabilities and equity

$

29,262,713

 

 

$

28,655,372

 

 

 

-

 

 

 

-

 

(1) Breakdown of our debt is as follows:

 

 

 

 

 

 

 

Recourse debt

$

7,250,617

 

 

$

6,755,376

 

Non-recourse debt

$

3,248,021

 

 

$

2,873,458

 

 

 


Tesla, Inc.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(In thousands)

 

 

Supplemental Consolidated Financial Information

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

254,673

 

 

$

(742,706

)

 

$

(671,163

)

 

$

(1,272,660

)

 

$

(1,469,771

)

Adjustments to reconcile net income (loss) to net

   cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and impairment

 

 

502,825

 

 

 

485,255

 

 

 

400,624

 

 

 

1,404,313

 

 

 

1,166,397

 

Stock-based compensation

 

 

204,728

 

 

 

197,344

 

 

 

112,653

 

 

 

543,711

 

 

 

332,412

 

Losses related to the SolarCity

   acquisition

 

 

 

 

 

 

 

 

18,225

 

 

 

 

 

 

29,796

 

Other

 

 

77,737

 

 

 

97,432

 

 

 

88,867

 

 

 

328,974

 

 

 

364,262

 

Changes in operating assets and liabilities,

   net of effect of business combinations

 

 

351,318

 

 

 

(166,989

)

 

 

(249,768

)

 

 

(141,097

)

 

 

(993,641

)

Net cash provided by (used in)

   operating activities

 

 

1,391,281

 

 

 

(129,664

)

 

 

(300,562

)

 

 

863,241

 

 

 

(570,545

)

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(510,271

)

 

 

(609,813

)

 

 

(1,116,434

)

 

 

(1,775,746

)

 

 

(2,628,126

)

Payments for the cost of solar energy systems,

   leased and to be leased

 

 

(49,494

)

 

 

(67,400

)

 

 

(128,293

)

 

 

(189,869

)

 

 

(547,085

)

Business combinations, net of cash acquired

 

 

(1,200

)

 

 

(5,604

)

 

 

 

 

 

(6,804

)

 

 

(109,147

)

Net cash used in investing activities

 

 

(560,965

)

 

 

(682,817

)

 

 

(1,244,727

)

 

 

(1,972,419

)

 

 

(3,284,358

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash flows from debt activities

 

 

(195,760

)

 

 

244,196

 

 

 

1,820,399

 

 

 

221,301

 

 

 

2,386,840

 

Collateralized lease (repayments) borrowings

 

 

(142,568

)

 

 

(113,426

)

 

 

80,752

 

 

 

(343,086

)

 

 

416,427

 

Net borrowings under Warehouse

   Agreements and automotive asset-backed notes

 

 

114,942

 

 

 

114,069

 

 

 

78,297

 

 

 

403,039

 

 

 

166,991

 

Net cash flows from noncontrolling interests - Auto

 

 

17,224

 

 

 

32,355

 

 

 

 

 

 

74,178

 

 

 

11,654

 

Net cash flows from noncontrolling interests - Solar

 

 

27,070

 

 

 

90,375

 

 

 

41,643

 

 

 

110,687

 

 

 

489,549

 

Proceeds from issuances of common stock

   in public offerings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400,175

 

Other

 

 

94,874

 

 

 

31,053

 

 

 

80,415

 

 

 

219,945

 

 

 

257,386

 

Net cash (used in) provided by

   financing activities

 

 

(84,218

)

 

 

398,622

 

 

 

2,101,506

 

 

 

686,064

 

 

 

4,129,022

 

Effect of exchange rate changes on

   cash and cash equivalents and

   restricted cash

 

 

(6,370

)

 

 

(22,611

)

 

 

7,800

 

 

 

(18,879

)

 

 

35,736

 

Net increase (decrease) in cash and

   cash equivalents and restricted cash

 

 

739,728

 

 

 

(436,470

)

 

 

564,017

 

 

 

(441,993

)

 

 

309,855

 

Cash and cash equivalents and restricted cash

   at beginning of period

 

 

2,783,238

 

 

 

3,219,708

 

 

 

3,512,738

 

 

 

3,964,959

 

 

 

3,766,900

 

Cash and cash equivalents and restricted cash

   at end of period

 

$

3,522,966

 

 

$

2,783,238

 

 

$

4,076,755

 

 

$

3,522,966

 

 

$

4,076,755

 

 

 


Tesla, Inc.

Reconciliation of GAAP to Non-GAAP Financial Information

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Automotive gross profit – GAAP

 

$

1,573,564

 

 

$

691,027

 

 

$

432,043

 

 

$

2,804,015

 

 

$

1,697,573

 

Stock-based compensation expense

   in automotive cost of revenue

 

 

20,955

 

 

 

13,198

 

 

 

10,166

 

 

 

49,231

 

 

 

27,663

 

ZEV credit revenue recognized

 

 

(52,269

)

 

 

 

 

 

(575

)

 

 

(102,583

)

 

 

(100,575

)

Automotive gross profit excluding SBC and

   ZEV credit – non-GAAP

 

$

1,542,250

 

 

$

704,225

 

 

$

441,634

 

 

$

2,750,663

 

 

$

1,624,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive gross margin – GAAP

 

 

25.8

%

 

 

20.6

%

 

 

18.3

%

 

 

23.0

%

 

 

24.5

%

Stock-based compensation expense

 

 

0.3

%

 

 

0.4

%

 

 

0.4

%

 

 

0.4

%

 

 

0.4

%

ZEV credit revenue recognized

 

 

-0.6

%

 

 

0.0

%

 

 

0.0

%

 

 

-0.6

%

 

 

-1.1

%

Automotive gross margin excluding SBC

   and ZEV credit – non-GAAP

 

 

25.5

%

 

 

21.0

%

 

 

18.7

%

 

 

22.8

%

 

 

23.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common

   stockholders – GAAP

 

$

311,516

 

 

$

(717,539

)

 

$

(619,376

)

 

$

(1,115,574

)

 

$

(1,286,050

)

Stock-based compensation expense

 

 

204,728

 

 

 

197,344

 

 

 

112,653

 

 

 

543,711

 

 

 

332,412

 

Losses related to the SolarCity

   acquisition

 

 

 

 

 

 

 

 

18,225

 

 

 

 

 

 

29,796

 

Net income (loss) attributable to common

   stockholders – non-GAAP

 

$

516,244

 

 

$

(520,195

)

 

$

(488,498

)

 

$

(571,863

)

 

$

(923,842

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to

   common stockholders, basic – GAAP

 

$

1.82

 

 

$

(4.22

)

 

$

(3.70

)

 

$

(6.56

)

 

$

(7.80

)

Stock-based compensation expense

 

 

1.20

 

 

 

1.16

 

 

 

0.67

 

 

 

3.20

 

 

 

2.02

 

Losses related to the SolarCity

   acquisition

 

 

 

 

 

 

 

 

0.11

 

 

 

 

 

 

0.18

 

Net income (loss) per share attributable to

   common stockholders, basic – non-GAAP

 

$

3.02

 

 

$

(3.06

)

 

$

(2.92

)

 

$

(3.36

)

 

$

(5.60

)

Shares used in per share calculation,

   basic – GAAP and non-GAAP

 

 

170,893

 

 

 

169,997

 

 

 

167,294

 

 

 

170,019

 

 

 

164,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to

   common stockholders, diluted - GAAP

 

$

1.75

 

 

$

(4.22

)

 

$

(3.70

)

 

$

(6.56

)

 

$

(7.80

)

Stock-based compensation expense

 

 

1.15

 

 

 

1.16

 

 

 

0.67

 

 

 

3.20