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Tesla's 10-Q Reveals ZEV Credits Had A Major Impact In The Quarter
Chuck Jones , CONTRIBUTOR

A lot can be learned from reading through a company’s 10-Q and 10-K filings and Tesla is no exception. You can tease out revenue, expense and geographic details when going through the various sections.


ZEV credits came back into play for a quarter

While Tesla’s overall plans do not rely on ZEV (Zero Emission Vehicle) credits to be a contributor to gross margin they did contribute $76.1 million to revenue and gross margin in the September quarter due to one-time contracts with various OEMs. This was substantially above the $10 million in the June quarter and $0 the previous two quarters and Tesla expects them to be lower in the future but did not give any specific numbers in the 10-Q. Since the ZEV credits were 8.2% of the company’s total revenue they had a major impact to the quarter’s results.

When you remove the $76.1 million from Tesla’s total revenue of $932 million and non-GAAP gross margin dollars of $274 million the resulting gross margin percentage is 23.1% vs. the reported non-GAAP gross margin of 29.4%.

When you take the next step and remove the Powertrain components & related sales from Tesla’s total revenue and adjust again for the ZEV credits the resulting gross margin falls further to 21.9%. This is much lower than the June quarter’s 27.1% so it appears that the manufacturing changes had a large negative impact on the September quarter’s margins. It may not be a coincidence that there were almost no ZEV credits for the three prior quarters and such a large amount in the September quarter.


Source: Kevork Djansezian/Getty Images

China accounted for almost one-quarter of revenue

Tesla changed the way it reports its geographical revenue making it a bit tougher to determine which geographies were responsible for how much revenue. The company only provided revenue for the nine months for the US, Norway and China which while they account for 74% of total revenue they did not give North American (Canada is typically 3% of revenue so not a big deal to calculate) or Europe’s result.