Tesla, Inc. (NASDAQ: TSLA) shares up Thursday after the Company reported a profitable 2nd quarter financials, setting the electric car manufacturer on a course to join the S&P 500 index and surprising investors as most of the quarter was affected with coronavirus-related slowdowns.
According to Tesla, in Q2, total revenues remained relatively flat QoQ. The positive impact of higher vehicle deliveries, higher regulatory credit revenue and higher energy generation and storage revenue was somewhat offset by lower vehicle average selling price (ASP) and lower services and other revenue.
“Our operating profit improved in Q2 despite challenging circumstances. Positive impacts included lower operating costs due to a temporary reduction in employee compensation expense, a sequential increase in regulatory credit revenue and deferred revenue recognition of $48M related to a Full Self Driving (FSD) feature release. These positive contributions were offset by significant costs related to factory shutdowns, as well as a sequential increase in non-cash SBC expense primarily attributable to $101M related to 2018 CEO award milestones,” Tesla explained.
The Company’s energy business also generated a profit. Although recently launched and still ramping, Megapack was profitable for the first time in Q2. Storage deployments increased sequentially to 419 MWh, driven by increases in both Powerwall and Megapack.
As for Tesla’s outlook, the Company claims it has the capacity installed to exceed 500,000 vehicle deliveries this year, despite recent production interruptions. While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains the target.
In other news, Tesla also announced that it will build its largest U.S. assembly plant near Austin, Texas. The plant will cost $1.1 billion is expected to employ about 5,000 workers.
“Tesla is one of the most exciting and innovative companies in the world, and we are proud to welcome its team to the State of Texas,” Gov. Greg Abbott said in a statement. “Texas has the best workforce in the nation, and we’ve built an economic environment that allows companies like Tesla to innovate and succeed.”