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Tesla Second Quarter 2017 Update
•Model 3 production on track to achieve previously announced targets
•Expecting positive Model 3 gross margin in Q4; targeting 25% margin in 2018
•Deliveries grew 53% compared to Q2’16 in flat luxury vehicle market
•Projecting Model S and Model X deliveries to increase in 2H’17 vs 1H’17
•Q2 Automotive gross margin at 27.9% GAAP and 25.0% non-GAAP
•Q2 GAAP loss from operations improved sequentially, two quarters in a row
•More than $3 billion cash on-hand at the end of Q2
On July 28, 2017, we started delivering the “even more affordable car” from our original Master Plan. This was a huge milestone for Tesla and is very exciting for our entire team.
During Q2, our engineering, manufacturing and supply chain teams were focused on the final stages of Model 3 product development and building the “machine-that-makes-the-machine” for the start of production. Model 3 has been designed to be affordably priced and to provide compelling customer value, even without government incentives, while achieving a target gross margin comparable to Model S and Model X as production scales into 2018. With no advertising, paid endorsements or guerilla marketing campaigns, Model 3 net reservations have still steadily climbed every month, and have even accelerated further in recent weeks.
Orders for Model S and Model X have also been increasing, both leading up to and following the Model 3 handover event. In July, our weekly net order rate for these vehicles was about 15% higher than our Q2 average weekly order rate. In addition, although too early to draw strong conclusions, we are seeing an even further increase in net Model S orders since the July 28th event. This growing demand gives us even more reason to expect increased deliveries of Model S and Model X in the second half of this year.
Development of our other new products continues as well. The first Solar Roof installations have been completed recently at the homes of our employees, who we chose to be our first customers to help perfect all aspects of Solar Roof customer experience. By pairing either Solar Roof or our existing retrofit solar panels with a Powerwall, our customers can enjoy sustainable energy independence.
Having started production of Model 3 on schedule in July, and having installed the first Solar Roofs, our teams are now focused on ramping the production rate of these products to support our mission of accelerating the world’s transition to sustainable energy.
ADVANCING SUSTAINABLE TRANSPORT
In addition to the increased orders for Model S and Model X, customer response to Model 3 has been overwhelming. Since the handover event last week, we are averaging over 1,800 net Model 3 reservations per day. We opened the Model 3 configurator to the thousands of our employees with reservations so they could begin ordering their vehicles. Soon, non-employee customers will begin receiving invitations to order their cars in small groups based on when they placed their reservations, with existing Tesla owners receiving first priority. Deliveries to non-employees will begin in Q4.
Our first production vehicles are pre-configured with rear-wheel drive, a long-range battery starting at $44,000, with premium upgrades for an additional $5,000. This vehicle will offer a range of 310 miles and a 0-60 mph time of 5.1 seconds. The standard Model 3, starting at $35,000 with 220 miles of range and a 0-60 mph time of 5.6 seconds, should be available in the U.S. in November. Dual Motor All-Wheel Drive configurations will be available in the U.S. early next year. International Model 3 deliveries will begin in late 2018, contingent upon regulatory approvals, starting with left-hand drive markets, followed by right-hand drive markets in 2019.
Model 3 Handover Event, July 28, 2017
The following information was filed by Tesla, Inc. (TSLA) on Wednesday, August 2, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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