Energy News Monitoring

Tesla, INC. was incorporated in the State of Delaware in 2003. The company designs, develops, manufactures and sells high-performance fully electric vehicles, solar energy generation and energy storage products, and also installs and maintains such energy systems and sells solar electricity. Tesla has two operating segments: automotive and energy generation & storage. The energy product portfolio includes rechargeable lithium-ion battery designed to store energy at home or a small commercial facility or a fully integrated energy storage solution which consists of an up to 210kWh (AC) battery.

The major components of solar energy systems include solar panels that convert sunlight into electrical current. In 2018, Tesla deployed 1.04 GWh of energy storage, nearly tripling energy storage deployments compared to 358 MWh, deployed in 2017. In 2019 Tesla aims to more than double energy storage deployments to over 2 GWh. Tesla sees growth opportunities for Powerwall energy storage units not only in North America, but also in Australia and Europe where electricity rates are high and solar panels combined with Powerwall units will help reduce electricity bills.

The Hornsdale battery that Tesla built in South Australia is the largest battery in the world. Recently Tesla has received requests to build significantly larger battery projects. The Hornsdale project has generated interest from governments and municipalities to invest in large battery storage projects rather than in conventional energy generation. Powerpack units are now used in over 100 projects across 32 countries.

While total deployments (commercial & residential) decreased by 38% to 326 MW in 2018, cash and loan residential deployments increased from 39% in 2017 to 71% in 2018. This was an important contributor to improving the cash generation and profitability of the solar business.

According to the Annual Financial Report, consolidated revenues of the company were $21.46 billion in 2018 compared to $11.76 billion in 2017 and increased by $9.70 billion or 82%, driven by increased automotive sales revenues of $9.10 billion, or by 107% from $8.53 billion in 2017 to $17.63 billion in 2018, primarily due to an increase of approximately 144,330 Model 3 vehicle deliveries.

Gross profit from all segments of the Company increased by 82% or by $1.819.5 million from $2,222.5 million in 2017 to $4,042  million in 2018.

Segmentally, automotive leasing revenue decreased by $223.1 million, or 20%, from $1,106.5 million in 2017 to $883.4 million in 2018.

Services and other revenue increased by $389.9 million, or 39%, from $1,001.1 million in 2017 to $1,391 million in 2018. The increase was primarily due to an increase in used vehicle sales. Additionally, there was an increase in non-warranty maintenance services revenue.

Cost of automotive sales revenue increased by $6.96 billion, or 104% in 2018 as compared to 2017. The increase was primarily due to a significantly higher volume of Model 3 vehicle deliveries in 2018.

Cost of automotive leasing revenue decreased by $219.8 million, or 31%, in 2018 compared to 2017.

Cost of services and other revenue increased $651.3 million, or 53%, in 2018, compared to 2017. The increase was primarily due to the increase in the cost of new service centres and additional service personnel.

Gross margin for total automotive remained relatively consistent at 23% in 2018 and 2017. 

Energy generation and storage revenue, which includes the sale of solar energy systems, energy storage products, leasing revenue from solar energy systems, and the sale of solar energy systems incentives, increased by $439 million, or 39%, from $1,116.3 million in 2017 to $1,555.2 million in 2018. The increase was primarily due to increases in deployments of Powerpack and Powerwall units, and due to cash and loan solar energy systems projects. The increase in Powerpack revenue was predominantly due to an increase in revenue of $81.2 million for the South Australia battery project.

In 2017 energy generation and storage revenue increased by $934.9 million, or 515%, from $181.4 million in 2016 to $1,116.3 million in 2017, predominantly due to the inclusion of the full-year of revenue from the solar business, which the company gained by acquiring SolarCity in 2016.

The cost of energy generation and storage revenue, which includes material and labour costs, warehouse rent, freight, warranty expense and other, increased by $490.4 million, or 56%, in 2018 as compared to 2017 primarily due to increases in deployments of Powerpack and Powerwall units as well as cash and loan solar energy system projects.

Gross margin for energy generation and storage decreased from 22% to 12% in 2018 compared to 2017. The decrease was primarily due to a three-fold growth of MWh of energy storage deployments in 2018. Additionally, increases in costs for cash and loan solar energy system projects, and impairment charges on solar energy system leasing arrangements have further contributed to the decrease in gross margin.

In 2017 gross margin for energy generation and storage increased from 2% to 22% compared to 2016. This was predominantly due to the inclusion of revenue and costs from solar business, which Tesla gained by acquiring SolarCity.

Research and development expenses, which consist primarily of personnel costs for engineering, research, manufacturing engineering and test organizations, prototyping expense and professional services, increased by $82.3 million, or by 6%, from $1,378.0 million in 2017 to $1,460,3 million in 2018. This increase was primarily due to an $84.2 million increase in employee and labour-related expenses.

In 2017 R&D expenses increased by $543.7 million, or 65%, from $834.4 million in 2016 to $1,378 million in 2017. This increase was primarily due to a $274.9 million increase in employee and labour-related expenses.

The company expects that gross margin for automotive revenues, in particular, for the Model S and the Model X, should remain relatively stable compared to 2018. Energy generation and storage revenue should increase significantly in 2019, mainly due to the storage business. The gross margin of Energy business should grow as the energy storage margin continues to improve from its current level. Tesla is excited about 2019.