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Tesla Revenue Breakdown And Sales Growth

Tesla Model S at a car show. Source: Flickr

Tesla (NASDAQ:TSLA) has been growing at a breakneck speed.

Tesla’s growth can be seen from the company’s revenue or sales growth rates.

In this article, we will look at several of Tesla’s revenues or sales-related metrics, including the revenue figures on a yearly and quarterly basis, sales breakdown by segment and by region as well as growth rates.

Other than the sales number, we also dive into Tesla’s gross margin in this article to see how the company’s profitability has changed over the years.

Let’s move on!

Breakdown of Tesla’s Revenue

Let’s first take a look at the breakdown of Tesla’s sales.

The following snapshot shows Tesla’s revenue breakdown extracted from the company’s consolidated income statements.

Tesla annual sales

Tesla annual sales from 2017 to 2019

Based on the snapshot above, Tesla’s revenue can be categorized into the following segments:

In short, Tesla’s sales come from several revenue segments, including automotive sales and leasing, services, and the energy sector.

In the following discussion, we will look at how each of Tesla’s revenue segments has performed over the years.

Let’s read on!

Chart of Tesla’s Revenue (Yearly)

Tesla revenue by year

Tesla revenue by year

* Annual revenue is a GAAP measure and is obtained from Tesla’s consolidated income statements.

On a yearly basis, Tesla’s revenue or sales soared to a record high in 2020 at slightly more than $30 billion.

Tesla made only $4 billion in annual sales 6 years ago.

Between 2015 and 2020, Tesla’s sales grew at a CAGR of more than 50% to reach its current level of $32 billion.

Year to date, Tesla made more than $10 billion in sales in the 1st quarter alone in 2021.

In short, Tesla’s sales growth has been at an extraordinary speed as seen over the chart above.

Tesla’s Revenue vs. GM vs. Ford

Tesla annual revenue vs. GM and Ford

Tesla annual revenue vs. GM and Ford

* Tesla, GM and Ford’s revenue are GAAP measures and are obtained from their respective consolidated income statements.

While Tesla’s revenue has reached record highs over the years, it is still far behind that of its peers, including General Motors and Ford Motors.

As seen in the chart, Tesla’s total sales in 2020 were only 1/4th of what GM and Ford each made in the same year.

If you talk about the peak revenue figures, GM and Ford’s sales have reached up to $160 billion in prior years.

Comparing that with Tesla’s total revenue of only $30 billion, Tesla still has a long way to go to reach the $160 billion level.

Tesla’s Annual Revenue Breakdown (By Absolute Value)

Tesla annual revenue breakdown (by value)

Tesla annual revenue breakdown (by value)

* Annual revenue by segment is a GAAP measure and is obtained from Tesla’s consolidated income statements.

On a yearly basis, Tesla’s automotive revenue made up the bulk of its total sales, at $27 billion in 2020.

Tesla’s services revenue was second at $2.3 billion in 2020.

Falling behind is Tesla’s energy or solar revenue at about $2 billion in 2020.

Between 2015 and 2020, Tesla’s automotive sector had been the company’s biggest revenue contributor.

During the same period, Tesla’s automotive sector had grown the most compared to other sectors.

Tesla’s Annual Revenue Breakdown (By Percentage)

Tesla annual revenue breakdown (by percentage)

Tesla annual revenue breakdown (by percentage)

* Annual revenue breakdown by percentage is calculated by the author using Tesla’s automotive revenue, energy revenue and services revenue obtained from the company’s consolidated income statements.

On a percentage basis, Tesla’s automotive revenue made up more than 80% of the company’s total sales.

Tesla’s automotive revenue used to be making up more than 90% of the company’s total sales.

However, the ratio has slowly declined and reached only 86% as of 2020, compared to less than 10% for the energy and services segment each in the same year.

The ratio of Tesla’s services revenue has remained relatively unchanged over the last 6 years.

However, Tesla’s energy segment has grown from 0% in 2015 to 6% in 2020, indicating the important roles the energy sector has played over the years to the company.

Tesla’s Revenue Annual Growth Rates

Tesla revenue annual growth rates

Tesla revenue annual growth rates

* Annual revenue growth rates are calculated by the author using Tesla’s yearly total revenue, automotive revenue, energy revenue and services revenue obtained from the company’s consolidated income statements.

In terms of growth rates, Tesla’s total revenue grew 28% in 2020 compared to the prior year.

Both of Tesla’s automotive and energy revenues grew at about the same rate which was 30% in 2020.

Tesla’s services sector grew the least at only 3.6% in 2020.

Between 2018 and 2020, Tesla’s automotive sector grew the most at an average growth rate of 45%.

On the other hand, Tesla’s energy sector grew the least at an average growth rate of only 12.5% in the last 3 years.

Tesla’s energy actually had a negative growth rate in 2019 at -1.5%.

Chart of Tesla’s Revenue (Quarterly)

Tesla revenue (quarterly)

Tesla revenue (quarterly)

* Quarterly total revenue is a GAAP measure and is obtained from Tesla’s consolidated income statements.

On a quarterly basis, Tesla made slightly higher than $10 billion in 1Q 2021.

Between 2015 and 2020, Tesla’s quarterly revenue or sales had not been a smooth sail as there were ups and downs all these years.

For instance, Tesla’s sales declined by 40% in 1Q 2019 compared to the prior quarter but were still up 12.5% year over year.

Overall, Tesla’s quarterly revenue has been on a rise since 2015.

The rising trend in the plot is an important signal as it indicates a growing demand for the company’s automotive and solar products.

This is especially crucial for a growth company like Tesla.

You may see some ups and downs in the plot, but on a long-term basis, we are seeing a rising trend.

Chart of Tesla’s Revenue (TTM)

Tesla revenue (ttm)

Tesla revenue (ttm)

* TTM quarterly revenue is calculated by the author and consists of the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Quarterly revenue is a GAAP measure and is obtained from Tesla’s consolidated income statements.

To smooth out the quarterly plot, I created the trailing 12-month (TTM) revenue plot which is shown in the chart above.

The TTM plot is best used to see the trend of Tesla’s revenue curve.

On a TTM basis, Tesla’s revenue rose to a new high at $36 billion in Q1 2021.

On a side note, Tesla’s TTM sales figures nearly doubled year over year between 2015 and 2018, driven mainly by the growth in Model 3 deliveries and growth in other parts of the business, including the energy sector.

For example, Tesla’s TTM sales grew 75% year over year from 4Q15 to 4Q16.

Similarly, Tesla’s TTM sales grew 70% year over year from 4Q16 to 4Q17.

As seen in prior discussions, Tesla’s energy grew the most between 2016 and 2018.

While Tesla may have reported explosive growth in TTM revenue, the vehicle average selling price (ASP) continued to decline by about 11% year-on-year in 2020 according to Tesla 4Q 2020 earning release.

The decline in ASP has been mainly attributed to the company’s shift in product mix to the more affordable Model 3 and Model Y from the premium Model S/X.

Tesla’s ASP continued to decline as of 2020 1Q according to its 1Q 2021 earnings release.

Chart of Tesla’s Gross Margin (Quarterly)

Tesla gross margin (quarterly)

Tesla gross margin (quarterly)

* Quarterly gross margin is a GAAP measure and is calculated by the author using Tesla’s quarterly revenue and gross income obtained from the company’s consolidated income statements.

The gross margin is an important metric that measures the gross profitability of a company.

Tesla’s gross margin shown in the chart above is based on the GAAP standard and accounts only for Tesla’s costs of sales while leaving out other expenses such as research and development and SGA.

According to the chart above, Tesla’s gross margin has trended lower between 2015 and 2019 and reached the bottom at about 12.4% in 1Q19.

However, the downtrend reversed in 2019 and the gross margin is seen ticking higher since 2019.

From 1Q 2019 onward, Tesla’s quarterly gross margin was seen rising and reached 21.4% as of Q1 2021.

Tesla’s gross margin improvement persisted into 2021 in which a near 20% gross margin was seen in most of the quarters.

The expanding margin between 2019 and 2021 has been a result of strong Model 3/Y production and deliveries, and the continuous cost reduction.

According to Tesla’s 1Q 2021 earnings release, Tesla’s average costs per car for all models totaled $84,000 in 2017.

However, Tesla managed to bring the average cost per vehicle to only $38,000 in Q1 2021 by continuously launching new products and building more factories.

Chart of Tesla’s Gross Margin (TTM)

Tesla gross margin (ttm)

Tesla gross margin (ttm)

* TTM gross margin is calculated by the author and consists of the sum of the quarterly data on a trailing 12-month or 4-quarter basis.
* Quarterly gross margin is a GAAP measure and is obtained from prior numbers computed by the author.

As mentioned, the TTM curve is used to smooth out the bumps in the quarterly plot and to better observe the long-term trend of Tesla’s gross margin.

From a TTM standpoint, Tesla’s gross margin is seen improving since 2018 and continued to move higher to the 20% level in 2020.

As of 2021 Q1, Tesla’s TTM gross margin maintained at the 21% level which has already been achieved in prior quarters.

Tesla’s gross margin will further improve in 2021 as a result of production volume expansion and continuous cost reduction.

According to the Q4 2020 earnings releases, Tesla has targeted to produce and deliver 500,000 vehicles by the end of 2020.

For your information, Tesla has met the production and delivery target in which as many as half a million vehicles were produced and delivered by the end of 2020.

Going forward, Tesla is planning to produce and deliver 750,000 vehicles by 2021, a 50% growth year over year with respect to 2020.

Achieving the 750,000 vehicle production and deliveries target will certainly drive margin expansion and thus, leading to more profits.

Chart of Tesla’s Revenue By Segment (With Automotive Sales)

Tesla revenue by segment (with automotive sales)

Tesla revenue by segment (with automotive sales)

* Quarterly revenue by segment is a GAAP measure and is obtained from Tesla’s consolidated income statements.

Tesla’s quarterly revenue breakdown shows that the company’s automotive sales made up more than 80% of Tesla’s total revenue.

In Q1 2021, Tesla’s automotive sales revenue alone had contributed $8.7 billion in sales.

The lion’s share of the automotive sales revenue tends to make other business segments look insignificant in terms of revenue contribution.

As of 2021 Q1, none of Tesla’s other business segments has yet to cross the $1 billion revenue mark.

However, Tesla’s services revenue was getting close at about $900 million in sales in 1Q 2021.

This scenario shows just how critical the automotive product or perhaps the Model 3, is to Tesla.

Tesla has been dangerously walking on a fine line by counting on only a single product for growth since 2017.

If the Model 3 had failed miserably, Tesla would have gone out of business.

There is just too much risk for Tesla to rely wholely on a single product for its survival all this while.

Fortunately, Tesla has already started to diversify its products by introducing the Model Y, which the company has already started producing and delivering since 2Q 2020 at the Fremont Gigafactory.

For your information, Tesla has also started producing Model Y at the Shanghai Gigafactory in late 2020 and is expected to ship Model Y for the Chinese market in early 2021.

Tesla Revenue By Segment (Without Automotive Sales)

Tesla revenue by segment (without automotive sales)

Tesla revenue by segment (without automotive sales)

* Quarterly revenue by segment is a GAAP measure and is obtained from Tesla’s consolidated income statements.

The chart above shows Tesla’s revenue breakdown by segments but with automotive sales revenue being excluded.

As seen from the chart, it shows only Tesla’s quarterly revenue from the energy sector, automotive leasing and services.

Accordingly, Tesla’s “services and other revenue” has been increasing and overtaking that of the automotive leasing and energy segments to become the largest revenue contributor since Q4 2018 among the 3 segments.

In subsequent quarters, Tesla’s services segment continued to lead the race and reached $893 million on a quarterly basis in 2021 Q1.

During the same period, Tesla’s energy sector has been fast catching up in terms of revenue growth in 2020 and at one point even overtook that of the services sector.

However, Tesla’s energy sales dived considerably in 1Q 2021 on a sequential basis.

While Tesla’s automotive leasing revenue has been on a rise in the last few quarters, it only managed to reach $300 million on a quarterly basis in 1Q 2021.

Although Tesla’s solar revenue plunged considerably on a quarterly basis in 2020 Q1, it rose 68% year over year, driven mainly by a record energy storage deployments of 445MWh in the same quarter.

Year over year, Tesla’s energy storage deployment grew 71%.

Similarly, Tesla’s solar deployment also increased significantly to 92MW in 1Q 2021, a 163% increase from the same quarter a year ago.

Tesla’s services growth continued to outpace the rest of the business sectors, indicating that its importance cannot be underestimated.

For one thing, the “Services and Other” segment may inherently reflect the growth of its new car deliveries.

Understandably, when Tesla delivered more vehicles, the company has to follow through with the services and maintenance of these vehicles, resulting in the sales growth of the services business segment.

Chart of Tesla’s Revenue By Region

Tesla revenue by region

* Quarterly revenue by region is a GAAP measure and is obtained from Tesla’s consolidated income statements.

The chart above shows Tesla’s revenue breakdown by region into the United States, China, Norway and Netherlands.

Starting in 2020, Tesla has done away with the revenue breakdown for Norway and the Netherlands.

Instead, it has lumped these regions into “Other” in the revenue breakdown as shown in the chart above.

As the chart shows, sales from the United States contributed the most revenue to Tesla all these years, indicating that the US has been by far the largest market for Tesla from 2015 to 2021.

In 2021 Q1, Tesla’s sales from the United States alone reached as much as $4.4 billion, representing a YoY growth of 60%.

This figure is inclusive of Tesla’s automotive and energy segment revenues as well as other revenue sources in the United States.

Both Netherlands and Norway as well as other European countries contributed the 3rd largest revenue source to Tesla in 1Q 2021 at $2.9 billion.

This figure falls under the “Other” category as shown in the chart above and is inclusive of international sales from other countries not mentioned here.

China shot to the 2nd spot at $3 billion of sales in 2021 1Q.

Year over year, Tesla grew its revenue in China by more than 200% in the 1st quarter of 2021.

Of all the regions, the sales from the United States and China grew the fastest, with China being the best performer with YoY sales growth averaging over 145% for the last 5 quarters.

The rising revenue in both the U.S. and China throughout 2020 indicates a strong demand for Tesla’s products, even during one of the worst pandemic outbreaks the world has seen.

Internationally, Tesla’s sales started to pick up again in 2021 Q1 when it reported $2.9 billion of sales.

Year over year, Tesla grew its international revenue by 26% in Q1 2021.

In short, Tesla reported the strongest sales growth in China in 2020 and 2021, with sales doubling on a year-on-year basis.

Tesla’s Revenue Sequential Growth

Tesla revenue QoQ growth rates

Tesla revenue QoQ growth rates

* Sequential growth rates are calculated by the author using Tesla’s quarterly total revenue obtained from the company’s consolidated income statements.

While most quarters in the chart show positive quarterly growth rates, there is still a handful of them with minor negative growth rates and most are in the low single digits except for 1Q 2019 quarter when revenue plunged by a large percentage at -37%.

The reason for the large drop in sequential growth rate was primarily due to the pull-forward sales of electric vehicles to 1Q19 from 4Q18 which was caused by the reduction in government subsidies (mostly California and Federal level) starting 2019.

Although government subsidies, largely in California, has been cut starting in 2019 and Federal Tax credits had been totally phased out, demand for Tesla electric vehicles has still been going strong as seen from the impressive double-digit quarterly growth rates in 2Q19 and 4Q19 at 40% and 17% respectively.

As of Q1 2021, Tesla’s total revenue declined by a modest 3% sequentially.

Tesla’s Total Revenue Year Over Year Growth

Tesla revenue YoY growth rates

Tesla revenue YoY growth rates

* Year over year growth rates are calculated by the author using Tesla’s quarterly total revenue obtained from the company’s consolidated income statements.

Similarly, the chart above shows the year over year growth rate of Tesla’s total revenue for the past 6 years from 2015 to 2020.

The results of the current chart are even more impressive considering that most quarterly results are positive and some of them are having triple-digit growth rates.

Year over year, Tesla’s quarterly sales grew at an impressive growth rate of 73.5% in 2021 1Q, driven mostly by strong vehicle delivery volumes.

Conclusion

In the last 6 years, Tesla’s total revenue has grown from $4 billion in fiscal 2015 to more than $30 billion in fiscal 2020.

The CAGR is roughly 50% between 2015 and 2020.

Other than revenue, Tesla’s gross margin has also expanded considerably since 2019 and reached 21% as of 1Q 2020 on a quarterly basis, driving profitability to a new high in the same quarter.

While Tesla’s sales reached new highs on a yearly and quarterly basis, they are still far behind that of GM and Ford, indicating that Tesla still has plenty of opportunities lying ahead.

Overall, Tesla has managed to grow the revenue and also expand the gross margin in spite of the COVID-19 challenges.

References and Credits

1. Financial figures in all charts in this article were obtained and referenced from Tesla’s quarterly and annual filings available in Tesla Investor Relationship.

2. Featured images in this article are used under creative commons license and sourced from the following websites: Paulius Malinovskis and CODE_n.

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{ 1 comment… add one }
  • Michael Edenedo November 25, 2020, 10:22 pm

    As Tesla continues to grow, and SpaceX successes become real, will it be merged into the company?

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