Tesla Inc. (TSLA) has grown rapidly into one of the world's largest all-electric vehicle companies through the sale of cars and pickup trucks in the U.S., Europe, and China. The automotive segment accounts for the vast majority of revenue at the Palo Alto-headquartered company, and the U.S. accounts for just over half of sales. Tesla faces growing competition from other major automakers who are developing and marketing electric vehicles, including General Motors Co. (GM), China-based Nio Inc. (NIO), and Volkswagen AG (VOW3), and Daimler AG (DAI), both headquartered in Germany.
- Tesla makes, sells, and services all-electric vehicles in the U.S., Europe, and China. It also sells energy generation products.
- The company gets the vast the majority of its revenue and profit from automotive sales.
- Tesla is experiencing rapid growth in China.
- The company has posted annual losses in each fiscal year since going public in 2010, but just posted its fourth consecutive quarter of profits in Q2 2020.
- Tesla was not added to the S&P 500 Index, despite meeting the eligibility criteria.
Tesla has struggled to earn profits, reporting a loss in each of the last five fiscal years. However, the electric carmaker has now posted profits in each of the last four quarters, including two that have been affected by the economic impacts of the COVID-19 pandemic. The company said that, due to the pandemic, it temporarily suspended operations at each of its manufacturing facilities worldwide at some point during the first half of the year in order to comply with government requirements or accommodate the needs of its employees and suppliers.
Tesla posted net income of $129 million in Q2 2020, which ended June 30 2020. It was a huge milestone marking the fourth consecutive quarter of profits. Tesla posted a net loss of $389 million in the same three-month period a year ago. Revenue was $6.0 billion, down 4.9% from the year-ago quarter.
Just over half, or 51%, of that revenue was generated in the U.S., while China accounted for 23% of total revenue. Other countries across the globe accounted for the remaining 26%. While revenue from the U.S. fell 11.2%, revenue from China grew 102.9% compared to the year-ago quarter.
Tesla Business Segments
Tesla operates through two main business segments: Automotive and Energy Generation and Storage. The company provides revenue and gross profit metrics for each segment, as we show below and in the pie charts above.
Tesla's Automotive segment comprises the design, development, manufacturing, sales, as well as the leasing of electric vehicles and automotive regulatory credits. The segment, which accounts for 94% of total revenue and 98% of total gross profit, also includes non-warranty after-sales vehicle services, sales of used vehicles, retail merchandise, and vehicle insurance revenue. The segment posted gross profit of $1.2 billion in Q2 2020, up 41.9% compared to the same three-month period a year ago. Revenue fell 5.3% to $5.7 billion.
Energy Generation and Storage
The Energy Generation and Storage segment, which accounts for 6% of total revenue and 2% of total gross profit, includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products and related services. The segment posted gross profit of $21 million in Q2 2020, down 51.2% compared to the same quarter a year ago. Revenue for the segment rose slightly, up 0.3% to $370 million.
Tesla Recent Developments
Tesla became eligible for inclusion in the S&P 500 index of the largest U.S. companies after posting a fourth consecutive quarter of profitability in Q2 2020. However, the decision committee at Standard & Poor's (S&P) earlier this month decided not to include the electric automakers shares in the index. Shares of companies that are added to the S&P 500 tend to get a boost as funds that track the index now have to buy those shares. Many investors bought shares in Tesla in hopes the company would be included. Tesla's shares are up about 418% since the start of the year, as of September 18, 2020.
How Tesla Reports Diversity & Inclusiveness
As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Tesla and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Tesla releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.
Below is a table of potential diversity measurements. It shows whether Tesla discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Tesla breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.
|Tesla Diversity & Inclusiveness Reporting|
|Race||Gender||Ability||Veteran Status||Sexual Orientation|
|Board of Directors||✔|
Tesla Inc. "Form 10-K for the fiscal year ended December 31, 2019," Page 38. Accessed Sep. 18, 2020.
Tesla Inc. "Q2 2020 Update." Accessed Sep. 18, 2020.
Tesla Inc. "Form 10-Q for the quarterly period ended June 30, 2020," Page 10. Accessed Sep. 18, 2020.
Tesla Inc. "Form 10-Q for the quarterly period ended June 30, 2020," Page 5. Accessed Sep. 18, 2020.
Tesla Inc. "Form 10-Q for the quarterly period ended June 30, 2020," Page 35. Accessed Sep. 18, 2020.
The Wall Street Journal. "Why Tesla Was Left Out of the S&P 500." Accessed Sep. 18, 2020.
CNN Business. "Tesla Inc." Accessed Sep. 18, 2020.