Tesla has released its financial results for the third quarter of 2018. Q3 was a truly historic quarter for Tesla.
Model 3 is attracting customers of both premium and non-premium brands, making it a truly mainstream product. Model 3 was the best-selling car in the US in terms of revenue and the 5th best-selling car in terms of volume.
With average weekly Model 3 production through the quarter (excluding planned shutdowns) of roughly 4,300 units per week, Tesla achieved GAAP net income of $312 million.
Tesla also delivered on its internal cost efficiency targets, leading to GAAP Model 3 gross margin of more than 20%, which exceeded their guidance. Finally, company’s total cash increased by $731 million and Tesla had free cash flow (operating cash flow less capex) of $881 million despite less than 10% of that amount coming from key working capital items (payables, receivables, and inventory).
The Model 3 production system stabilized in Q3. The company made the changes necessary to enable production of an All-Wheel Drive (AWD) version of Model 3 without disrupting our production rate. Tesla started the quarter producing only Rear Wheel Drive (RWD) Model 3s and ended the quarter producing almost entirely AWD cars. Even though AWD cars are significantly more complex to build, Tesla produced 5,300 Model 3s in the last week of Q3.
In Q3, Tesla delivered 56,065 Model 3s to customers. Based on trade-ins received from customers since the start of Model 3 production, more than half of those trade-in vehicles were priced below $35,000 when new. It is clear that customers are trading up their relatively cheaper vehicles to buy a Model 3 even though there is not yet a leasing option and the Q3 starting price of a Model 3 was $49,000.
In Q3, Tesla delivered 27,710 Model S and Model X vehicles to customers. While demand in China remains challenging due to a 40% import duty for Model S and X, China deliveries still remained a material portion of our Q3 deliveries, and Tesla managed to offset the decline there with growth in North America and Europe.
Given the growth of Model 3, Tesla delivered over 70,000 vehicles in the US in Q3.
During Q3, Tesla opened four new store and service locations, resulting in 351 locations worldwide at the end of the quarter. Tesla’s electrified Mobile Service fleet continued to grow further to more than 373 service vehicles on the road at the end of Q3. In Q3, Tesla opened 44 new Supercharger locations for a total of 1,352 Supercharger stations. To date, Tesla has over 11,000 Supercharging connectors and over 20,000 Destination Charging connectors globally.