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Tesla reported a net income of $2.7 billion in the second quarter, marking a 20% increase from the same period last year. However, the company’s electric vehicle (EV) price cuts have impacted profits. Tesla has repeatedly reduced the cost of its four EV models in the United States, Mexico, Europe, and China, boosting sales in the first half of the year with record Q2 deliveries of 466,140 units. However, these price cuts have also reduced Tesla’s typically robust automotive margins.
For the second time this year, Tesla’s gross margins decreased to 18.2%, down from 25% in Q2 2022 and down from 19.3% last quarter. Tesla matched Wall Street revenue estimates of around $25 billion for the quarter, nearly 50% higher than year-ago sales of $16.9 billion. Most of the revenue came from Tesla’s automotive revenue, which hit $21.3 billion in Q2, including $282 million from federal tax incentives.
A small but notable portion of Tesla’s Q2 revenue came from “services and other revenue,” which usually includes after-sales vehicle services and parts, retail merchandise, vehicle insurance, and the Supercharger network. Tesla’s number of Supercharger stations and connectors increased 33% in the second quarter to 5,265 and 48,082, respectively. The automaker has been opening its network of Superchargers to other automakers in recent months, notably Ford and General Motors, and most recently Nissan.
Energy generation and storage revenue remained flat quarter-over-quarter but grew 74% year-over-year. Tesla’s operating margin dropped slightly from 11.4% in Q1 to 9.6% in Q2. Its capital expenditures remained flat QoQ but increased 19% YoY. The company reported it spent $2 billion in capital expenditures, likely due to continued production ramping in the automaker’s Berlin and Texas gigafactories. Tesla’s Q2 earnings show that Berlin’s vehicle capacity increased by 25,000 units over Q1 reported numbers.
Tesla closed out the quarter with $1 billion in free cash flow, up from the $441 million with which it finished the first quarter. Tesla stock closed at $291.26 Wednesday and dropped 5% in after-hours trading.
Tesla’s 2023 Outlook
Tesla’s full-year outlook hasn’t changed. “For 2023, we expect to remain ahead of the long-term 50% CAGR with around 1.8 million vehicles for the year,” reads Tesla’s earnings report. In Q1, Tesla delivered 422,875 vehicles globally. In the second quarter, that number hit 466,140 units, a 10% increase. If Tesla’s production and delivery capacity keeps increasing at around the same clip, the automaker will be able to reach close to 2 billion units by the end of the year.
However, Musk did say Wednesday that Q3 production will decrease slightly, driven by planned downtime for factory upgrades. He noted that macroeconomic conditions are uncertain and could impact execution positively or negatively in the near term. Musk also defended Tesla’s many price cuts, saying it was a move to combat the potential for lower sales amid economic uncertainty.
Cybertruck Information Still Lacking
Tesla finally built its much-delayed Cybertruck over the weekend at Giga Austin, but few details were shared at the time. During Wednesday’s earnings report, the company still left investors and analysts wanting more. “It’s always very difficult to predict the ramp initially, but I think we’ll be making them in high volume next year, and we will be delivering the car this year,” said CEO Elon Musk Wednesday.
