Tesla reported on Wednesday that the company earned $ 16 million in the first quarter and had sales of $ 5.985 billion. The results were supported by improved automotive margins and lower operating costs.
Tesla's first quarter results were lower than the previous period as the COVID 19 pandemic disrupted operations and dampened sales. Despite the COVID 19-related disruption, the company still managed to make a profit for the third consecutive quarter.
The gross margin in the automotive sector rose to 25.5% in the first quarter after 20.2% in the same period last year. Tesla includes regulatory credits in its automotive sales, which are reflected in the gross margin. Regulatory loans were $ 354 million in the first quarter, an increase of 64% compared to the first quarter of 2019. Loan revenues declined after the first quarter of last year and ranged between $ 111 million and $ 134 million USD before rising again this past quarter.
Tesla's $ 5.985 billion revenue was 19% lower than the fourth quarter, which generated $ 7.38 billion. However, first quarter sales were 32% higher than the $ 4.5 billion generated in the same period last year.
Tesla earned $ 16 million, or 9 cents, per share in the first quarter, 85% less than in the fourth period, when it posted a net profit of $ 105 million, or 56 cents, per diluted share. Tesla's first quarter earnings were significantly higher than the same period last year when a loss of $ 702 million was recorded.
Adjusted for one-time effects, Tesla earned $ 227 million in the first quarter, or $ 1.24 per share.
The financial picture reported by Tesla contained some problematic numbers, including a negative free cash flow of $ 895 million. Tesla previously had the goal of generating positive free cash flow for 2020.
The first quarter was full of milestones for Tesla. It was the first full quarter in which the Shanghai plant was in series. It is also the first quarter in which the automaker started producing and delivering the Y model.
Tesla remained committed to its previous 2020 sales prospect of 500,000 vehicle deliveries, but did not say it could achieve this goal. The company said it had installed a capacity of more than 500,000 vehicle deliveries this year, despite announced production interruptions.
“For our US factories, it remains uncertain how quickly we and our suppliers can ramp up production after operations resume. We work closely with every supplier and associated government, ”the company said in its letter to shareholders.
Tesla reported first quarter earnings one day after CEO Elon Musk sent a FREE AMERICA NOW tweet to its 33.4 million followers in response to the seven boroughs in the Bay Area that extended an order to stay at home until the end of May. Tesla is headquartered in Palo Alto, and its headquarters and several other related facilities are located in Fremont, California and are subject to order.
The company ceased production at the plant on March 24. It was scheduled to go back on May 4th. The company's other U.S. operations were also temporarily shut down, including the Sparks, Nevada, and Buffalo, New York solar plants.
Earlier this month, Tesla announced that 88,400 vehicles were delivered in the first quarter, which exceeded most analysts' expectations despite a 21% decline from the previous quarter as the COVID-19 pandemic put pressure on demand and created logistical challenges.
Tesla produced 103,000 electric vehicles in the first quarter, around 2% less than in the previous period.