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Tesla wrote in its Shareholders Letter for Q2 2020 that it has the capacity installed to exceed 500,000 vehicle deliveries in 2020. At the moment, despite all the difficulties, the company remains true to its original forecast of delivering half a million vehicles this year.
"We have the capacity installed to exceed 500,000 vehicle deliveries this year, despite recent production interruptions. While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target."
Tesla's business has shown strong resilience in these challenging times. Despite closing its main Fremont plant for nearly half the quarter, the company posted a fourth sequential GAAP profit in Q2 2020, while generating positive free cash flow of $418M.
Tesla's profit has consistently improved thanks to fundamental operational improvements. The progress made by the company in the first half of this year allowed them to successfully complete the second half of 2020. Tesla said its existing capacity continues to improve to meet demand and the company continues to add more capacity.
Tesla currently has an installed capacity to produce 690,000 vehicles per year.
Tesla is installing additional equipment at the Fremont factory, which is expected to increase the total production capacity of Model 3 and Model Y from 400,000 to 500,000 units per year. The factory also produces 90,000 Model S and Model X annually.
At the moment, Tesla's Chinese factory has an installed capacity to produce 200,000 vehicles per year. The Model 3 received a strong reception in China, becoming the top-selling EV.
Despite the fact that in the first half of the year the automotive industry contracted by about 30% compared to the same period last year, Tesla actually managed to increase deliveries in this timeframe. Therefore, relative to a massive decline in the industry, the company actually excelled.
During the Earnings Call, Tesla CEO Elon Musk said demand is not an issue at the moment. But, with the coronavirus crisis, it is difficult to leverage the global supply chain. However, the company is sticking to its original 2020 forecast and expects to deliver 500,000 vehicles.
Article edited by @SmokeyShorts, you can follow him on TwitterFollow @EvaFoxU
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.