Tesla: A Surprise Profit, a Stock Bounce, and a Factory Site Secured

by Steph Willems

Published: July 23rd, 2020

tesla a surprise profit a stock bounce and a factory site secured

Everything was moving in Tesla’s favor Wednesday night, with the electric automaker reporting an unexpected quarterly profit — its fourth in a row — for Q2 2020. This positive financial news, made possible by other automakers’ hunger for regulatory credits, sent the company’s already elevated (overvalued?) stock closer to the face of God.

At the same time, CEO Elon Musk announced something long suspected: That Tesla’s next domestic assembly plant will set up shop in Austin, Texas.

Tesla’s GAAP net income of $104 million followed a quarter that saw automotive revenues touch $5.18 billion, a slight uptick from Q1 but a modest 4 percent decrease from a year ago. Total revenue amounted to just over $6 billion, helped along by $428 million in regulatory credit sales.

Now the industry’s go-to source for such green indulgences, Tesla’s credit haul was nearly triple the sum recorded in the same quarter last year. In this case, it was enough revenue to push the company into the black during a time of both pandemic-borne fiscal hardship and previously-planned expansion.

Elsewhere on the company’s balance sheet, Tesla’s operating margin sits at 5.4 percent and cash flow has rebounded into the positive after reversing course last quarter. Available cash? $8.6 billion.

And Tesla will need that money, as there’s an assembly plant to finish in Germany, key to supplying that rapidly greening market with rolling stock, with a second U.S. plant waiting to get off the ground.

In an earnings call reported on by CNBC, Musk said his desired locale of Texas has come to pass. The automaker plans to build a sprawling assembly plant near Austin to supply the Eastern half of the United States with Model 3 and Y vehicles, as well as the upcoming Cybertruck and Semi. The company’s existing Fremont, California plant will continue taking care of global Model S and X production, as well as Model 3 and Y production for the Western U.S.

Musk characterized the planned second facility, situated 15 minutes from Austin (on 2,000 acres) as an “ecological paradise” complete with riverfront walking trails. Tax breaks totaling nearly $15 million are part of that land deal.

During the call, Musk said Tesla is not trying to be “super profitable” — rather, its main objective is sustainable growth. The company’s stock rose more than 5 percent in pre-market Thursday trading.

[Image: JL IMAGES/Shutterstock]

#AssemblyPlants #Earnings #HighFinance #Production #Tesla

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Mcs on Jul 23, 2020

"And I find even Teslas to be impractical as compared to ICE cars." Having put almost 100k miles on an EV, I've never totally understood the impractical argument. I suppose it applies if you live in an apartment/condo and don't have at-work charging. Otherwise, you get a 300 to 400-mile range car that you can charge at home. Solar panel cost has dropped to $1.49 per watt so you can even make your own fuel hassle-free. You also don't have to hassle with oil changes. If you don't do your own changes, you have to make appointments and take time out of your day to get it done. For many people, EVs are more practical than ICEs. I don't think you can really make a blanket statement that EVs are impractical. Like every other type of vehicle variation, it depends on an individual as to what's practical and what isn't. We have even more choices these days. While I do agree that Tesla is in a bubble, I think their moves outside of the auto sector are promising and will eventually be larger than their auto business. Power distribution has a huge potential as well as their new RNA Bioreactors for the pharmaceutical industry. (https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2020002598) Like Amazon moving beyond books, Tesla is moving beyond cars and could become a fairly large conglomerate. There has even been talk of taking the heat pump technology from the Y and using it for commercial and residential buildings. Now that they are in the cell manufacturing business, they could even move into the consumer battery market. That crazy high valuation could look conservative in another decade. https://www.forbes.com/sites/miriamtuerk/2018/07/10/power-utilities-shouldnt-underestimate-the-power-of-tesla-heres-why/#555a38b258a6

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- Art Vandelay on Jul 23, 2020
  
  But heat pump technology has been in commercial and residential buildings for decades.
  
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- Dukeisduke on Jul 23, 2020
  
  @Art Vandelay True. The houses on my street, built in the late '90s (except for three built a few years earlier) are all-electric, and use heat pumps for the HVAC system.
  
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- Vulpine on Jul 23, 2020
  
  @dukeisduke I have a heat pump system in my house too... One problem though, because of its no-valve design, I have one room in my house that gets hotter than any other in the summer and another that stays colder than any other during the winter. This is where Tesla's 8-valve heat pump has the advantage, don't you think?
  
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- Art Vandelay on Jul 23, 2020
  
  @Vulpine I don't know...I don't have this issue with my heat pumps. In a household application I'd think such issues were managed via dampers and duct sizing. This is honestly the first I've heard of it and all 4 houses I've owned had them
  
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- Mcs on Jul 23, 2020
  
  @Vulpine I'd be interested in the low-temperature capabilities of the Tesla heat pump. My current pump has to shut down below 40F and the conventional heat has to take over. For a car, a heat-pump has to operate in sub-zero F temps, unless they are switching to resistant heat at that point. If they don't switch to resistive, that technology would have my attention. A home heat pump would also be a good complement to a solar/powerwall system for home heating with fossil fuels in cold climates. I know that once I get my solar installation (Telsa is down to $1.49/Watt for solar panels), I'll definitely be looking for a heat pump that can handle sub-zero temps.
  
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- Art Vandelay on Jul 24, 2020
  
  @Vulpine That's a good point @MCS. Home installations do require a resistive back up system as have cars I've seen them in. If he has gotten around that issue that would be worth adapting but I thought that was just a design limitation of how they work.
  
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2manycars on Jul 23, 2020

How "practical" a purchase will a 10-15 year-old electric car with an out-of-warranty, decaying battery pack be? Not to mention the other expensive gee-wiz tech that will be breaking down. A Toyota Corolla or Camry that age likely will have many more trouble-free years left, and will work just fine for those many, MANY people who have no place for a home charger (let alone two or three in multi-car households), and don't have a place at work to charge. I think Tesla owners are living in la-la land to an extent and have no concept of the way most people live. Electric cars in their current state of development simply make no sense, either economically or from a practicality standpoint, for the vast majority of people. I'll certainly never buy one. Also, take away the carbon credit scam that Musk uses to mulct other companies and see how long Tesla makes a profit. It's a vampire company.

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- Vulpine on Jul 23, 2020
  
  @2manycars: "Also, take away the carbon credit scam that Musk uses to mulct other companies and see how long Tesla makes a profit. It’s a vampire company." --- I think you'd be surprised. Tesla would be foolish to ignore an opportunity to save money but considering their revenues over the last year, they don't really NEED those credits; they're just using them to pad their growth and keep their numbers in the black while spending more in that growth.
  
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