Tesla (TSLA) reported an impressive total deliveries up 40% YoY in its Shareholder's Letter for Q1 2020. This is the third quarter in a row that the company’s positive results play an important role and support Tesla’s key role in future mobility.
March quarter delivery numbers were up 40% year over year to 88.4k compared to the overall US auto industry down 29%, despite the Tesla-specific headwind of the elimination of the $1,875 US tax credit in the quarter.
Auto gross margins, which is the foundation of sustainable profitability, turned out to be better than expected. Shanghai Model 3 margins are already approaching Fremont Model 3’s and Model Y is already profitable in its first quarter of production. Gross margin on cars was 20% higher than consensus at 16.8% and increased compared to 18.9% in the previous quarter.
Despite the situation with COVID-19, Tesla was able to deliver 12,230 Model S/X and 76,266 Model 3/Y. Model Y production was organized at a high level and produced more Model Y in the first quarter than the Model 3 in the first two quarters in early production. Shanghai Model 3 capacity almost meets Fremont factory levels. China subsidy removal did not affect Giga Shanghai sales, the factory is still experiencing back logs.
This was made possible thanks to the fact that Tesla has an excellent model of online sales, and in a pandemic, it was able to organize contactless delivery of ordered cars, both in the United States and abroad.
The company intends to continue to produce and deliver at least 500k cars in 2020. This shows that the Shanghai and Model Y manufacturing processes are making measurable improvements and will not undergo the same production setbacks the company experienced ramping the Model 3.
On the call, the company mentioned that it exited the quarter with its largest-ever order backlog, indicating that demand is intact and growing despite several headwinds.
Featured image: MS Power UserFollow @EvaFoxU