Despite solar woes, Tesla recorded its first profitable Q1

For the first time in its history, U.S. electric car maker Tesla reported a positive GAAP net income in the first quarter, driven by the profitability of the new Model Y.

Tesla’s solar and storage ventures were less successful, however. And, some big boardroom news came out just before the release of its earnings report.

The company installed 35 MW of solar in the first quarter, down 35% from the 54 MW installed in the fourth quarter of 2019, and down 26% from 47 MW in the first three months of last year.

While the company has noted that it has reached the production benchmark of 1,000 solar roofs a week, launch inefficiencies with the newest offering were blamed for its lower-than-expected deployment and profits.

As for energy storage, Tesla installed 260 MWh in the first quarter, down more than 50% from 530 MWh in the fourth quarter of 2019. The company did sell its 100,000th Powerwall in the first quarter and claimed that more than 40% of solar customers have opted to install at least one Powerwall.

Vehicle production and deliveries were both down in comparison to the final three months of 2019, with the company producing just under 103,000 vehicles and delivering 88,500. On the year, vehicle production rose 33% and deliveries jumped by 40%.

The first quarter is traditionally slow for the company and turning a profit in the first three months of the year was a point of celebration. Year over year, Tesla experienced growth in vehicle deliveries, vehicle production and energy storage deployment, but solar deployment was down 26% from the first quarter of 2019.

Elephant in the room

As for the elephant in the room, the Covid-19 crisis reached its breaking point late enough into the first quarter that the full impact of the pandemic will not be reflected until the results for the next quarter. But the shutdown of Model Y production at Tesla's facility in Fremont, California, has not dampened Musk’s ambitions for the car. He said he remains confident that it will become the company’s best-selling product ever. He made that claim just moments before remembering to read the disclaimer about forward-looking statements.

Musk vs. governance

Tesla filed an amendment to its 10K this week, and in an unprecedented move, it announced that directors and officers insurance waw too expensive, and that CEO Elon Musk would provide the coverage, for at least the next year.

Per the filing:

“Tesla determined not to renew its directors and officers liability insurance policy for the 2019-2020 year due to disproportionately high premiums quoted by insurance companies. Instead, Elon Musk agreed with Tesla to personally provide coverage substantially equivalent to such a policy for a one-year period, and the other members of the Board are third-party beneficiaries thereof. The Board concluded that because such an arrangement is governed by a binding agreement with Tesla as to which Mr. Musk does not have unilateral discretion to perform, and is intended to replace an ordinary course insurance policy, it would not impair the independent judgement of the other members of the board.”