Tesla: Improved performance with growing Model 3 deliveries, launching Model Y SUV

Starts operations at Gigafactory Shanghai, installing in-house developed full self-driving computer

2020/03/25

Summary

  Tesla stated during its Financial Results review, that 2019 was a turning point for the company (Q4 ’19 Update). Production of the Model 3 at the Fremont plant in the U.S. doubled to 302,000 units from the previous year, boosting the company’s total production output including the Model S and Model X to 365,000 units. In early 2019 Tesla started exporting the Model 3 to overseas markets such as Europe and China. Deliveries of the Model 3 doubled to 300,000 units due to growing demand, and total deliveries worldwide increased to 367,000 units. Along with an increase in vehicle deliveries, revenues grew and operating income returned to profitability in the second half of 2019. Although operating income for full year 2019 remained negative, loss from operations was significantly reduced. Free cash flow for the fourth quarter of 2019 reached USD 1.0 billion.

  According to Tesla’s financial outlook announced at the end of January 2020, 2020 sales volumes are expected to exceed 500,000 units, up by 36% year-over-year (y/y). Due to ramp of the Model 3 in Shanghai and the Model Y in Fremont, production volumes also will likely exceed 500,000 units. Revenues are projected to grow along with an increase in vehicle deliveries. Quarterly free cash flow and net income are expected to be positive throughout 2020, with possible temporary exceptions around the launch and ramp of new products.

  Tesla has been increasing production of the Model 3 in Fremont, and during the fourth quarter of 2019, the plant’s total annual production capacity was 415,000 units. Assembly of the Model Y started in January 2020 ahead of the schedule. In China, Gigafactory Shanghai was built in 10 months and began deliveries of the Model 3 in December 2019. Tesla is planning to build a new plant in the suburbs of Berlin, Germany with deliveries scheduled to begin in 2021.

  Tesla has launched the new Model Y compact SUV in the U.S. in March 2020. The new Cybertruck pickup truck is scheduled to launch in 2021, but Tesla has already received 250,000 orders for the Cybertruck within one week after its debut in November 2019. In March 2019, Tesla started taking reservations for the Semi, a Class-8 heavy-duty truck. Production of the Semi is scheduled to start in 2020.

  In China, just after Tesla started shipping the Model 3 out of the Gigafactory Shanghai, Tesla was required by the Chinese government to close the plant for 10 days from January 30, 2020 as a measure to prevent the spread of the new coronavirus epidemic. Its operations resumed on February 10. Tesla mentioned that deliveries of the Model 3 had been delayed by a week and a half, but this will impact the business results for the first quarter only slightly. In March 2020, Tesla received governmental approval to produce the long-range RWD version of the Model 3.  

  In April 2019, Tesla unveiled its new in-house designed Full Self-Driving (FSD) computer, and is installing this system, which is 21 times faster than its previous computer, in all Tesla vehicles. In 2019, new features including “Lane Departure Avoidance” as well as “Smart Summon,” which enables the vehicle to autonomously navigate a parking lot and drive itself to the user’s location, were introduced in Tesla vehicles via over-the-air (OTA) software updates.

新型コンパクトSUVのModel Y 上海工場
New compact SUV Model Y (Photo: Tesla) Gigafactory Shanghai started production in 10 months after breaking ground (Photo: Tesla)

 

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Analysis of Tesla's Over-the-Air Software Updates (Aug. 2019)
Tesla Model 3 Teardown: Chassis, and Body (May 2019)
Tesla Model 3 Teardown: Interior, and HVAC system (Apr. 2019)
Tesla Model 3 Teardown: Motor, Inverter, and Battery (Mar. 2019)
Tesla seeking profitability with launch of lower priced Model 3s (Jan. 2019)