Tesla grows revenue 42%, but automotive margins decline

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Tesla reported earnings after the bell, and the results sent the stock up slightly after hours.

  • Earnings per share (EPS): $2.27 (adjusted) vs $1.81 expected, according to Refinitiv
  • Revenue: $16.93 billion, vs. $17.1 billion expected, according to Refinitiv

Automotive gross margin came in at 27.9%, down from 32.9% last quarter and 28.4% a year ago, impacted by inflation and more competition for battery cells and other components that go into electric vehicles. Automotive revenues made up $14.6 billion of the company’s total, with $1.47 billion coming from services and other revenue, and $866 million from the company’s energy segment.

The company generated $344 million in automotive regulatory credits revenue in the second quarter, the company said in its shareholder deck. That’s a $10 million or nearly 3% decline from the same period in 2021.

Tesla has grown its charging infrastructure more than its store and service centers, reporting 709 store and service locations for the quarter and 3,971 Supercharger locations (with 36,165 total Supercharger connections) in the second quarter. Those numbers represented 19% growth in store and service center locations year over year and a 34% growth in the number of charging locations.

The company offered limited detail about its investments and sales of cryptocurrency, writing, “As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.” Overall, the company’s cash and cash equivalents increased by $847 million during the quarter. Tesla made waves among crypto enthusiasts when it announced in early 2021 that it had purchased $1.5 billion worth of bitcoin.

With two new factories now standing in Texas and outside of Berlin in Germany, Tesla has kept its soft guidance for “50% average annual growth in vehicle deliveries,” over a “multi-year horizon.”

Tesla still counts its hotly anticipated Cybertruck (announced in Nov. 2019), electric Semi truck (unveiled in Nov. 2017), updated Roadster concept (also unveiled in Nov. 2017), and other speculative projects like the humanoid robot as “in development.”

Early this month, Tesla reported vehicle deliveries of 254,695 electric cars for the period ending June 30, 2022, showing 27% growth from the year-ago quarter, but an 18% decrease sequentially. Deliveries are the closest approximation of sales Tesla discloses. Its Model 3 and Model Y vehicles comprised 93% of those deliveries.

Russia’s brutal invasion of Ukraine and Covid outbreaks in China exacerbated ongoing semiconductor and parts shortages, along with other supply chain snags. Covid restrictions in Shanghai forced Tesla to temporarily suspend or limit production at its factory there during the second quarter of 2022.

CEO Elon Musk also lamented the high costs of starting up production at new factories in Austin, Texas and Grünheide in Brandenburg, Germany. During an interview with Tesla Owners Silicon Valley, a company-recognized fan club, Musk said the two new factories “are gigantic money furnaces.”

The CEO also announced headcount cuts in June.

On the brighter side, Tesla recently marked a milestone with an employee posting on LinkedIn this week that the company surpassed production of 2 million vehicles at its Fremont, California factory.

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