SpaceX and Tesla CEO and Twitter owner Elon Musk attends the Viva Technology innovation and startup conference at the Porte de Versailles Exhibition Center on June 16, 2023 in Paris, France.
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Tesla reported earnings after the bell, showing record quarterly revenue but lower margins thanks to price cuts and incentives. The share price was essentially unchanged in after-hours trading.
- Income: $24.93 billion. That may not compare to Refinitiv’s expected $24.47 billion.
- Earnings: 91 cents per share adjusted. That may fall short of Refinitiv’s expected 82 cents per share.
Net income (GAAP) was $2.70 billion, an increase of 20% over last year.
By comparison, in the first quarter of 2023, Tesla reported net income of $2.51 billion on revenue of $23.33 billion. In the second quarter of last year, Tesla reported net income of $2.27 billion on $16.93 billion in revenue.
Earlier this month, Tesla reported a total of 466,140 vehicle deliveries for the second quarter and said it produced 479,700 electric vehicles. Deliveries are the closest approximation of sales that Tesla reports.
Those deliveries were higher than Wall Street’s expectations and were driven in part by incentives and discounts. Accordingly, operating margins reached 9.6%, the lowest in at least the last five quarters. Total gross margin was 18.2%, also low for the same period.
Tesla explained in the shareholder panel that its lower margins in the second quarter were the result of lower average selling prices “due to the mix and pricing” of the cars it sells and the cost of ramping up production of battery cells it designs in-house, known such as 4680 cells, among other factors.
Revenue from Tesla’s core car business rose 46% year over year to $21.27 billion, up about 6.5% sequentially. Its revenue from energy generation and storage — from solar installations and backup batteries — grew 74% year-over-year to $1.51 billion. With more vehicles on the road, Tesla’s “service and other” revenue, including fees for out-of-warranty vehicle repairs, rose 47% to $2.15 billion.
Tesla’s research and development spending rose to $943 million (from $771 million in the first quarter), as the company wrote in a shareholder package that it is focusing on “being at the forefront of AI development” and has begun production of its Dojo “trained computers.”
Tesla’s crossover, the Model Y, became the world’s best-selling car in the first quarter of 2023.
Retail shareholders are hoping the company will offer more updates on the Cybertruck on Wednesday’s earnings call, according to questions submitted in advance on a platform run by Say Technologies.
During the last week, Tesla shared a photo on social media of what it said was the first Cybertruck ever built at its factory in Austin, Texas. However, the company has yet to reveal specs or pricing for the sci-fi-inspired angular pickup that Musk originally debuted and touted in 2019.
Beyond Cybertruck details, retail investors posting on Say Technologies are asking for updates on Tesla’s production of 4,680 battery cells, which are seen as critical to ramping up production of the company’s Class 8 semi-truck and Cybertruck; regarding Tesla’s development of a humanoid robot called the Tesla Bot or Optimus; and about a new factory Tesla said it would build in Mexico.
Investors are also looking for updates on the company’s progress toward developing an autonomous or robotics-ready vehicle. While Musk touted Tesla’s self-driving ambitions in 2016, he said the company would conduct hands-free travel in the U.S. by the end of 2017. Tesla has yet to complete that mission.
Morgan Stanley analyst Adam Jonas wrote in a note earlier this week: “For the rally to continue, we think Tesla needs to prove it’s more than just a car company.”
Musk, who is also CEO of SpaceX and controlling shareholder and chief technology officer of social media company Twitter, recently launched another new company, xAI, which he registered in Nevada. Musk said earlier this month that xAI plans to collaborate with both Tesla and Twitter, and that xAI will likely work with its EV business on the “silicon front” and on the “AI software front.”