The second quarter of 2019 was a banner one for Tesla in terms of building and delivering new electric vehicles. As it reported earlier in July, the company built 87,048 EVs and delivered 95,356 of them. However, the company lost $408 million over the same three months, according to the latest earnings report. Although it's the second loss-making quarter in a row, it's still an improvement on Q1 2019.
Encouragingly, automotive revenue grew healthily compared to Q1. Tesla brought in $5.3 billion in this category, only $111 million of which was for selling emissions credits. Now that the Model 3 is on sale in several continents, and 77,634 were delivered to customers during the quarter, Tesla says that the majority of orders were for the long range Model 3. The company reports that the average sales price is around $50,000 and that manufacturing costs are declining. Tesla also reveals that, now that it has sold several hundred thousand cars on three continents, it is beginning to gain some insight into the mix of options its customers prefer.
Tesla says that all the equipment in the factory in Fremont, California, has been tested at a run rate of 7,000 Model 3s a week. The company says it's now aiming to build 10,000 cars a week by the end of 2019.
To make that happen, Tesla says production will begin at the Shanghai Gigafactory by year's end. In Q2, the company says it began moving machinery into the Shanghai factory and that when the Chinese production line is up and running it will be "a simplified, more cost-effective version of our Model 3 line with capacity of 150,000 units per year." Tesla says that the Shanghai factory is being funded mainly by local debt.
Model Y still coming in fall 2020
With this latest earnings report, there are also a few updates about the Model Y crossover. This is to be based on the Model 3, with a high degree of parts commonality between the two. (That was Tesla's goal for the Models S and X, although in the end those two EVs shared far fewer components than Tesla hoped.) The plan is still to launch the Model Y by the fall of 2020.
If that's really going to happen, the company will need to step up its spending on capital expenditures. Tesla says that it intends to spend between $1.5 billion and $2 billion on capex in 2019, which is a reduction from previous guidance. To even reach the lower of those amounts will require a big uptick; Tesla has been cutting capex steadily since a peak in Q3 2017. That trend continued apace this quarter at just $250 million.
Tesla says that it has $5 billion in cash thanks to a recent equity and debt raise, of which $614 million is free cash flow.
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