How much money does Tesla make? Before answering this question, let’s take a look at how does Tesla actually make money. From the company financial statements, Tesla total sales comes from the following business segments:
- 1. Automotive sales revenue (inclusive of regulatory credits)
- 2. Automotive leasing revenue
- 3. Services and other revenue
- 4. Energy business revenue
At the end of each quarter, the company adds up all the sales from the above business segments and arrive at a total sum of revenue. We call that the total revenue. Having said that, I have created multiple charts below to track Tesla quarterly total revenue, total revenue by segment and total revenue by region.
Theses charts show how much money Tesla has made from past quarterly results.
Chart of Tesla Total Revenue by Quarter
The first chart above shows Tesla quarterly total revenue for the past 5 years from 2015 to 2019.
The long-term trend of the chart shows that total revenue has been trending higher. In 1Q15, total revenue was only $1.0 billion but has grown to an impressive figure of $6.4 billion in 2Q19. The growth rate is more than 600% over the 5-year period.
Furthermore, the growth of revenue in 3Q18 and 4Q18 was sort of exponential. The reason for the jump in revenue during the two quarters was primarily due to the record delivery of Model 3. As a result, Tesla made a profit during these two quarters.
Revenue has trended lower since 2019 but the long-term trend of the chart shows that the figure is expanding and the company is growing its sales.
Tesla will start manufacturing the Model Y in 2020. I believe at the start of delivery of Model Y, Tesla total revenue will be exploding, judging from the market share that Model Y is going to grab. For your information, Model Y is a high performance full electric compact crossover utility vehicle (CUV) that is capable of seating 7 people.
Chart of Tesla Quarterly Gross Margin
The second chart above shows Tesla quarterly gross margin for the past 5 years from 2015 to 2019. The gross margin is an important metric that measures the pricing power of a company. The higher a company can price its product, the higher gross margin it can get and thus the higher possibility of making a profit after accounting for other costs such as operating expenses.
From the chart above, the long-term trend shows that quarterly gross margin has been trending lower. Tesla had generated sales with higher gross margin back in 2015 compared to 2019. In 2015, gross margin was around 25% but has trended lower since 2019 and reached the lowest point at 15% in 2Q 2019.
The reason for the drop in gross margin can be attributed to the price reduction in electric vehicles that Tesla has been doing over the years. Tesla has reduced the pricing of its electric vehicles, specifically Model 3, to increase sales.
Since the emergence of Model 3, Tesla has aggressively reduced the prices of Model 3, hoping that mass adoption of electric vehicle can be achieved. Model 3 is targeted specifically for the mass market and to grab market share away from conventional fossil fuel burning vehicles.
Chart of Tesla Revenue By Segment
The chart above shows Tesla total revenue breakdown into several business segments. The respective business segments have been briefly mentioned at the start of this article.
As seen from the chart, the bulk of the revenue comes from automotive sales. Automotive sales revenue makes up close to 90% of total revenue. The remaining 10% of revenue is divided among several business segments.
In addition, if you have noticed, total revenue growth comes entirely from automotive sales. In other words, automotive sales contributes the bulk of the growth for Tesla. Other business segments do not really make much impact on the company in terms of revenue growth.
Chart of Tesla Revenue By Segment (excluding automotive sales)
The chart above is similar to the chart of Tesla revenue by segment that was discussed before except that I have stripped away the automotive sales revenue in this chart so that readers can clearly see the revenue contributions by other smaller business segments.
Services and other revenue has been trending higher in recent quarters in 2019. Surprisingly, it is the second largest revenue contributor after automotive sales.
Revenue from energy business and automotive leasing has been flat and may be heading for a decline. Part of the reason for the decline of both of these business segments may have been attributed to the fact that Tesla has been focusing its resources on Model 3 and the lack of new products for leasing. For your information, Tesla has only started the leasing of Model 3 in 2Q 2019.
Chart of Tesla Revenue By Region
The chart above shows Tesla total revenue breakdown by regions such as the United States, China, Norway, Netherlands and others for the past 5 years from 2015 to 2019.
As the chart shows, the sales from the United States contributes the most revenue to Tesla and the US has been the largest market for Tesla over the 5-year period. The second largest revenue contributor by region is China. After that, it was Norway and Netherlands in the third and fourth place respectively.
Having said that, the sales from the United States contributes the largest growth to the company. You can see from the chart that most of the growth of revenue has been the results of sales from the US over the 5-year period.
The long-term trend of the chart shows that the sales from the US is still trending upward even though there was a significant dip in revenue since 2019. The trend shows that the demand for Tesla products in the US is still very strong and will likely trend higher in future.
The explosive growth in revenue has been primarily due to the record delivery of Model 3 since 2018. I believe the revenue from the United States will increase even further when Tesla launches the Model Y in 2020.
Chart of Tesla Revenue By Region (China, Norway and Netherlands)
The chart above is similar to the chart of Tesla revenue by region that was discussed before except that I have stripped away the revenue from the United States in this chart so that readers can clearly see the revenue contributions by other regions such as China, Norway and Netherlands.
The revenue from both China and Norway has been trending higher and the upward trend is the most obvious in 2019. The upward trend tells us that the demand for Tesla products is very strong in these regions and I believe that the revenue growth from these regions will go even higher in future when Tesla introduces the Model Y.
For Netherlands, the revenue from this region has only been disclosed starting 3Q18. As such, there is not enough data to tell where the growth is heading. Nevertheless, the revenue generated from sales in Netherlands had been quite substantial at more than $200 million in average over the 4 quarters period.
Chart of Tesla Revenue Sequential Growth
The chart above shows the quarterly growth rate of total revenue for the past 5 years from 2015 to 2019.
I did a calculation of the average sequential growth for the past 17 quarters in a spreadsheet and the calculated figure is 15%. The double digit sequential growth rate of 15% is sort of impressive and it shows that there is still very strong demand for Tesla products.
Most of the quarters in the chart above show positive quarterly revenue growth, with only a handful of them showing small negative growth rate. The 1Q19 quarter shows a very large negative growth rate of -37% compared to prior quarter.
The reason for the large drop in sequential growth rate is primarily due to the pull-forward sales of electric vehicles in 1Q19 quarter to 4Q18 quarter. Customers had been rushing to purchase Tesla vehicles in 3Q18 and 4Q18 because of the reduction in government subsidies starting 2019.
Furthermore, demand for Tesla electric vehicles has come back in 2Q19 when the company obtained a sequential growth rate of 40%.
Chart of Tesla Revenue Year on Year Growth
The chart above shows the year over year growth rate of total revenue for the past 5 years from 2015 to 2019.
I did a similar calculation for the average year on year growth rate for the past 17 quarters and the figure is 73%. The double digit growth rate is exceptional and you will not see this kind of performance in other automakers such as GM and Ford.
The chart above shows that most quarters had double digit growth rate while some of them even had triple digit growth rate. Overall, the long-term trend shows that the company is undergoing impressive growth as sales has been growing year over year from 2016 to 2019.
Tesla total revenue has been trending higher over the 5-year period from 2015 to 2019. The average sequential and year on year growth rate is 15% and 73% respectively.
Tesla gross margin has been trending lower over the 5-year period from 2015 to 2019. The reason for the decline is primarily due to the price reduction in electric vehicles.
The total revenue by segment chart shows that automotive sales contributes the largest portion to total revenue.
The total revenue by region chart shows that the sales in the United States is the largest and the US is the largest marker for Tesla over the past 5 years.
Disclosure: The authors wrote this article themselves, and it expresses their own opinions. The authors are not receiving compensation for writing the article. The authors have no business relationship with any company whose stocks are mentioned in this article.
1. Financial figures for Tesla was obtained from Tesla Investor Relationship.