Tesla has kept financial losses at bay in the first quarter of the year, posting strong group-wide EBITDA and revenue numbers amid high hopes for its solar roof line in the longer term.
Releasing a financial update on Wednesday, the Silicon Valley firm claimed its US$16 million in positive GAAP net income this quarter marks the first time the indicator is on the black in its Q1 series, a milestone achieved even as the COVID-19 crisis forced it to shutter factories.
Tesla’s new figures for Q1 2020 revenues (US$5.9 billion) and EBITDA (US$951 million) were lower than in Q3 2019 and Q4 2019 but an improvement on Q1 2019 values. Despite Q1’s tendency to be “seasonably weak”, Tesla claims to have hit this quarter milestones for car production and deliveries.
However, the 35MW solar installs (see table below) in Q1 2020 were Tesla’s second lowest figure on record, following the all-time low of 29MW posted in Q2 2019. The numbers remain a far cry from the 150-200MW quarterly volumes Tesla used to report in 2016 and early 2017.
For their part, storage installs – a rising force within Tesla’s energy business – reached 260MWh between January and March 2020. The figure represents less than half the 530MWh Tesla had posted in Q4 2019, and brings battery deployment back to levels not seen since early 2019.
At a call with analysts on Wednesday, Tesla CFO Zachary Kirkhorn acknowledged the impacts seen in Q1 2020 in the energy business. Over the quarter, factory shutdowns mixed with “launch efficiencies” around its Solar Roof business line, “impacting” overall profitability.
Tesla’s solar and storage installs since Q1 2019
|Q1 2019||Q2 2019||Q3 2019||Q4 2019||Q1 2020||Quarter-on-quarter||Year-on-year|
|Solar deployed (MW)||47||29||43||54||35||-35%||-26%|
|Storage deployed (MWh)||229||415||477||530||260||-51%||14%|
Tesla reported 1Q 2020 revenue of US$293 million in its Energy Generation and Storage division, compared to US$436 million in the previous quarter and US$324.6 million in the prior year period.
Gross margin for energy generation and storage increased to 4% in the first quarter of 2020, compared to 2% in the prior year period. Tesla said that energy storage gross margin improved as a result of lower materials costs, partially offset by a lower gross margin in its cash and loan solar business and driven by higher costs from temporary manufacturing under-utilization of solar roof system production ramp.
International hopes for Solar Roof after 4MW milestone
Following its success staying in the black in Q1 2020, Tesla said it will not reconfirm its new full-year guidance – the firm had said in January it expected solar and storage installs to grow by “at least 50%” in 2020 – until it publishes its Q2 2020 update, later this year.
The firm sought this week to highlight the US$1.8 billion of cash it had added over Q1 2020, reaching a cumulative US$8.1 billion. The reserves were hit by negative flows of US$895 million but buoyed by the US$2.3 billion capital raise the Silicon Valley group launched in early February.
For Tesla, the impacts from the COVID-19 outbreak have manifold. As documented by PV Tech in recent weeks, the pandemic has postponed high-profile court cases faced by the firm and forced to shutter facilities including the Gigafactory 2 solar roof production line, in US city of Buffalo.
At this week’s call, CEO Elon Musk laid out the plans with solar tiles, following the self-styled weekly production record of 4MW scored in Q1 2020, which the company said equated to 1,000 rooftop projects. The outlook for the Solar Roof line is “extremely good” even if the current closures of permit offices have “shut down” the pre-pandemic momentum, Musk said.
Sharing plans to reach install capabilities of 1,000 roof systems a week, the CEO said the product is likely to be “very significant” for Tesla in the long run. The attention beyond North America – including “tremendous” interest from Chinese clients – makes Tesla expect this product will have an international projection, Musk said.
Tesla’s boss used the call to describe the US’ present lockdown measures as an “outrage”, in line with his recent controversial Twitter statements. He described extending shelter-in-place orders as “forcibly imprisoning people in their homes against all their constitutional rights.”
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