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Why Tesla’s Automotive Revenue Saw a 41% Sequential Fall in Q1

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Tesla’s first-quarter revenue

In the first quarter, Tesla (TSLA) reported revenue of ~$4.54 billion, up ~33.2% from the company’s $3.41 billion revenue in the first quarter of 2018 but down 37.1% from the $7.23 billion it reported in the fourth quarter of 2018.

With this, TSLA also missed Wall Street analysts’ first-quarter revenue estimate of $5.19 billion, according to Thomson Reuters data.

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Automotive segment’s revenue

In the quarter that ended in March 2019, Tesla’s revenue from the Automotive segment rose 36.1% YoY (year-over-year) but fell 41.1% sequentially to $3.72 billion.

While the company’s revenue from car sales fell 42.2% sequentially, its car leasing revenue fell 13.9% sequentially in the first quarter of 2019. Nonetheless, its car sales and car leasing revenue rose 37.0% and 24.0% YoY, respectively.

Sequential fall in car deliveries

In the fourth quarter, Tesla delivered 63,019 car units to customers, reflecting a 110.1% YoY increase. The company delivered 12,091 units of the Model S and Model X and 50,928 units of the Model 3 in the quarter. However, these total car deliveries in the quarter reflected a 30.7% sequential fall.

Despite Tesla’s solid three-digit positive car delivery growth YoY, a sequential fall in its car deliveries resulted in a sequential fall in its Automotive segment’s revenue.

Among other key factors, the reserve increase for the Models S and X related to a residual value guarantee and a vehicle buyback guarantee shaved ~$501 million off of Tesla’s Automotive revenue in the first quarter.

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