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Tesla Grows Revenue 42 Percent , But Automotive Margins Decline!

Following the closing bell, Tesla disclosed its quarterly results, and the market reacted positively to the company’s performance by bidding up its stock.

According to Refinitiv, earnings per share (EPS) came in at an adjusted $2.27, which was more than the $1.81 that was anticipated.

According to Refinitiv, revenue came in at $16.93 billion, which was below the $17.1 billion forecast.

The gross margin for the automotive industry came in at 27.9 percent, which is a decrease from the previous quarter’s 32.9 percent and the previous year’s 28.4 percent. This decline was caused by the impact of inflation as well as increased competition for battery cells and other components that go into electric vehicles. The energy division of the corporation contributed $866 million to the total revenue of the company, which was comprised of $14.6 billion from automotive sales, $1.47 billion from services and other sales, and $1 billion from other sales.

Revenues generated per category for Tesla

According to the information provided to shareholders by the corporation, the business brought in total revenue of $344 million from automotive regulatory credits during the second quarter. When compared to the same period in 2021, this is a decrease of roughly 3 percent or a loss of $10 million.

During an earnings call on Wednesday, Tesla CEO Elon Musk stated that the company’s new factory outside of Berlin produced more than 1,000 cars per week in June. Musk also stated that he anticipates the company’s new factory in Austin, Texas to surpass the production milestone of 1,000 cars per week within the next few months.

Tesla reported 709 store and service locations during the quarter, whereas there were 3,971 Supercharger stations (with 36,165 total Supercharger connections) in the second quarter. This indicates that Tesla’s charging infrastructure has grown more than its store and service center locations. These figures indicated a year-over-year increase of 19 percent in the number of store and service center locations as well as a year-over-year increase of 34 percent in the number of charging stations.

The company provided little information regarding its investments in and sales of cryptocurrencies, stating in a written statement that “As of the end of Q2, we have converted around 75 percent of our Bitcoin purchases into fiat currency.” The cash on our balance sheet increased by $936 million as a result of conversions in the second quarter. The total amount of cash and cash equivalents held by the corporation at the end of the quarter was up by $847 million overall. When Tesla revealed at the beginning of 2021 that it had acquired $1.5 billion worth of bitcoin, the news sent shockwaves through the community of crypto aficionados.

Musk explained the reason behind the sale of a large portion of their bitcoin holdings on Wednesday’s conference call, saying, “The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the covid lockdowns in China would ease, so it was important for us to maximize our cash position.” In addition, he stated that this “should not be construed as some conclusion on Bitcoin.” Both Tesla’s CFO Zachary Kirkhorn and Musk have stated that none of the company’s dogecoin has been sold.

Tesla has maintained its soft estimate for a “50 percent average annual increase in vehicle deliveries” over a “multi-year horizon” despite the recent completion of construction on two new factories in the state of Texas and just outside of Berlin in Germany.

Tesla continues to refer to its highly anticipated Cybertruck (which will be announced in November 2019), electric Semi truck (which was unveiled in November 2017), updated Roadster concept (which was also unveiled in November 2017), and other speculative projects such as the humanoid robot as being “in development.” In answer to a question posed by an investor on Wednesday, Tesla CEO Elon Musk stated that the company is targeting the middle of 2019 to begin delivery of the Cybertruck, a pickup that appears to be experimental in appearance.

Uncertainty regarding inflation

Ongoing shortages of semiconductors and parts, in addition to other problems with the supply chain, were made worse by Russia’s savage invasion of Ukraine and outbreaks of the Covid virus in China. During the second quarter of 2022, covid limits in Shanghai caused Tesla to either temporarily halt manufacturing at its factory there or reduce output to a lower level.

Musk criticized the high expenses of starting production at new factories late in May. These new factories were located in Austin, Texas, and Grünheide, Brandenburg, Germany. Musk described the two new facilities as “gigantic money furnaces” in an interview with Tesla Owners Silicon Valley, an organization that is recognized by the business as a fan club.

 

In an earlier tweet this month, Elon Musk suggested that Tesla may be able to reduce the cost of its electric vehicles if the rate of inflation “calms down.”

During the results call that took place on Wednesday, Tesla’s Chief Financial Officer Zachary Kirkhorn stated that “Austin and Berlin ramp inefficiencies will continue to weigh on our margins for the remainder of the year.” However, the effect ought to become less noticeable as we go up the ramp.

Musk also expressed his optimism by saying, “I expect inflation will fall towards the end of this year,” but he cautioned investors to take his prediction with a grain of salt.

During the call, executives stated that Tesla is now observing a negative trend for the majority of commodities that will either continue into next year or end this year. Musk, though, stated that there were several notable exceptions. “The processing of lithium is absurd,” he stated, before making an additional appeal to businesspeople to get involved in the lithium refining industry. “You can’t lose. He referred to it as a “permission slip to print money.”

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