SMM: on July 23, Tesla released its results for the second quarter of this year. Tesla's revenue and free cash flow exceeded expectations in the quarter, making it profitable for four consecutive quarters, according to financial data. Since then, Tesla's shares rose 6% after the market closed.
In the second quarter of this year, Tesla's revenue reached US $6.036 billion, up 1% from the first quarter of this year, down 5% from the same period last year, but exceeding market expectations of US $5.4 billion; gross profit was US $1.267 billion, an increase of 38% over the same period last year; adjusted profit before interest and tax was US $1.209 billion, an increase of 111% over the same period last year. Net income attributable to common shareholders (GAAP) was $104 million, up 550 per cent from the first quarter of this year and earning for the first four consecutive quarters; earnings per share belonging to ordinary shareholders rose 525 per cent quarter-on-quarter to $0.50; free cash flow was $418 million, down 32 per cent from a year earlier, but higher than analysts' expectations.
Last quarter, Tesla's auto business had revenue of $5.179 billion, up 1 per cent from a quarter earlier, down 4 per cent from the same period last year; gross profit was $1.317 billion, up 30 per cent from a year earlier; and gross profit margin was 25.4 per cent. Of this total, the sale of regulatory points (regulatory credits) generated $428 million in revenue for Tesla, up 286 per cent from a year earlier. Tesla's fully self-driving suite generated $48 million in deferred revenue in the second quarter.
In addition to revenue from regulatory points and fully self-driving kits, pay cuts are also a major reason for rising profits, Tesla pointed out in its financial report. In April, Tesla said in an internal email to employees that it would cut wages for all salaried employees and would temporarily lay off hourly workers.
During the earnings call, Musk announced that Tesla would build its next super factory near Austin, Texas. According to Tesla's plan, its Fremont car plant in California will produce Model S and Model X for all markets, as well as Model 3 and Model Y for the western North American market, and the new Texas plant will produce Cybertruck, Semi, Model 3 and Model Y models for the eastern North American market.
Tesla said it was adding new equipment to its Fremont plant, which is expected to increase its annual production capacity of Model 3 and Model Y from 400000 to 500000. Production of Model Y at the Shanghai plant is also on schedule and delivery is expected to begin in 2021. On the conference call, Musk said that the localization of parts in the Shanghai factory is obvious, and it is expected that the localization rate of domestic parts will increase to 80% by the end of 2020.
The outbreak disrupted production in the first half of this year, and the Tesla California plant was closed for nearly six weeks, but Tesla still maintains its delivery target of 500000 vehicles. In the second quarter of this year, Tesla delivered 90650 vehicles, higher than the expected 74130, up 2.55 per cent from the first quarter of this year, but down 4.8 per cent from the same period last year; production reached 82272, down nearly 20 per cent from the previous month and 5.5 per cent from a year earlier.
At the same time, Tesla said it was still difficult to predict whether there would be business disruptions in the second half of the year and how consumer confidence would change, and that Tesla would update its expectations if necessary.
In the past 12 months, Tesla's GAAP operating margin has reached nearly 5%, and it is expected to continue to grow, eventually reaching the industry-leading level. Production at Tesla's existing plants continued to increase in the second half of the year. Later this year, Tesla will build three factories on three continents at the same time.
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