Tesla’s Q1 & 2016 Sales Projections

We should have 2–3 more stories coming tomorrow regarding Tesla’s* quarterly letter and conference call, which just wrapped up, but here’s one more to close out the night.

All in all, Tesla’s reports on what happened in Q4 2015 and 2015 as a whole weren’t huge surprises. Much of the info was already out there, even if not precise. What was up in the air was info regarding Q1 production as well as production and demand going forward.

Tesla sales projection 2016


The last section of the shareholder letter summed these things up quite well, so I’ll just paste that in below. But first, the highlights in list format:

→ Full-year delivery projections (for the Model S + Model X) = 80,000–90,000 (my estimate/guess was just over 80,000, with approximately half of those headed to the US).

→ Approximately 16,000 vehicle deliveries in Q1 2016, ~60% more than Q1 2015.

→ Positive net cash flow and non-GAAP profitability for 2016 on the whole, as I just highlighted in a whole article.

→ “$1.5 billion in capital expenditures without accessing any outside capital other than our existing sources that support our leasing and finished goods inventory.”

Here are the full 5 paragraphs from Tesla:

Q1 and Full Year 2016 Outlook

We expect to generate positive net cash flow and achieve non-GAAP profitability for the full-year 2016. Thus our cash balance at the end of 2016 should increase from the year end 2015 level. We plan to fund about $1.5 billion in capital expenditures without accessing any outside capital other than our existing sources that support our leasing and finished goods inventory. We plan to invest in equipment to support cell production at the Gigafactory, begin installation of Model 3 vehicle production machinery, open about 80 retail locations and service centers, and energize about 300 new Supercharger locations.

To achieve these goals we plan to deliver 80,000 to 90,000 new Model S and Model X vehicles in 2016, representing accelerating growth over 2015 at the midpoint of the range. We expect our average vehicle transaction price to increase slightly during 2016, as Model X grows to become a larger share of our deliveries throughout the year. In Q1, we plan to grow deliveries 60% year on year to approximately 16,000 vehicles, and we plan to directly lease about the same percentage of cars as we did in Q4.

Throughout the rest of 2016, Automotive gross margin should continue to increase, helped by cost reductions for Model S and improving margin on Model X as our manufacturing efficiency improves for that vehicle. By year-end, Model S gross margin should begin to approach 30% and Model X gross margin should be about 25%, with continued improvement for Model X in 2017.

Q1 operating expenses should increase just slightly from Q4 as we sharpen our focus on expense management. Then as development work continues on Model 3 and as we expand to support growth, operating expenses should increase throughout 2016, so that for the full year total operating expenses should increase by about 20%.

Achieving these results in 2016 should leave us well positioned for 2017, when we plan to launch Model 3 and take another significant step towards our mission of accelerating the world’s transition to sustainable transportation.

Inspiring work. I think we will enthusiastically be covering it as it all rolls out.

*Full Disclosure: I’m an investor in Tesla (TSLA). That is, I own stock in the company and don’t intend to sell it for at least 10 years. As such, I may be biased, but I have enthusiastically covered Tesla for much longer than I’ve been a shareholder and I don’t aim to move the stock price with my words. Frankly, I just write about what I find interesting and important. I think Tesla will be a long-term success for a handful of obvious reasons. I also fully support its mission. These are the reasons I’m long TSLA.

Image via Tesla Motors

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