Despite closing plants in Shanghai and dealing with supply shortages, the electric-vehicle maker posted better-than-expected second-quarter earnings on Wednesday. Active trading pushed Tesla stock higher.
According to Refinitiv, the company’s adjusted EPS was $2.27, compared with $1.81 expected and,
$16.93 billion in revenue vs. $17.1 billion expected.
This year’s automotive gross margin was 27.9%, down from 32.9% last quarter and 28.4% a year ago, this is because of inflation and a competitive market for battery cells and other components for electric vehicles. The company’s automotive revenues accounted for $14.6 billion of its revenue, with services and other revenue representing $1.47 billion, and its energy business generating $866 million.
The company said in its shareholders’ deck that it generated $344 million in automotive regulatory credits in the second quarter. That would be a decline of almost 3% or $10 million as compared to last period in 2021.
In a quarterly earnings call Wednesday, Tesla CEO Elon Musk said that their new factory outside Berlin reached 1,000 vehicles per week in June, and that Austin, Texas should reach the same milestone within the next few months.
In the second quarter, Tesla reported that its charging infrastructure grew more rapidly than its store and service locations, with 709 store and service locations, while its Supercharger locations (with 36,165 total connections) grew significantly. The number of store and service center locations increased by 19% and the number of charging locations increased by 34% year over year.
In their writing, the business provided few information regarding its cryptocurrency purchases and sales, “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.” Cash and cash equivalents held by the corporation increased by $847 million during the quarter. When Tesla announced it had bought $1.5 billion worth of bitcoin in early 2021, it made waves among crypto enthusiasts.
Musk clarified on the call on Wednesday by saying that, “The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the covid lockdowns in China would alleviate so it was important for us to maximize our cash position.” He further said, “This should be not taken as some verdict on Bitcoin.” Musk and CFO Zachary Kirkhorn both confirmed that none of Tesla’s dogecoin had been sold.
Tesla has built factories in Texas and outside of Berlin in Germany, and is still aiming for “50% average annual growth in vehicle deliveries,” over a “multi-year horizon.”
Other speculative projects like the humanoid robot and Tesla’s much awaited Cybertruck electric Semi truck updated Roadster concept are still listed as “under development” by the company. Elon Musk responded to an investor’s question by saying that Tesla hopes to begin delivering a prototype pickup truck called Cybertruck by the middle of next year.
Uncertainty about inflation
Tesla’s factory in Shanghai experienced production restrictions because of Covid in the second quarter of 2022 due to government regulations.
Musk lamented the high costs of setting up new factories in Austin, Texas and Grünheide, Brandenburg, Germany, late in May. Tesla Owners Silicon Valley, the company’s official fan club, recently interviewed Musk. He called those factories “gigantic money furnaces.”
Musk said in a tweet earlier this month that Tesla could lower its electric car prices if inflation “calms down.”
Zachary Kirkhorn, Tesla’s CFO, stated on Wednesday’s earnings call, “Austin and Berlin ramp inefficiencies will continue to weigh on our margins for the balance of the year. However, the impact should reduce as we increase ramp.”
Musk also said, “I think inflation will decline towards the end of this year,” but cautioned investors not to take it too seriously.
According to Tesla’s executives, for most commodities, the company will see a downward trend by year’s end. Musk did, however, point out some exceptions. “The processing of lithium is insane,” Musk said, calling for entrepreneurs to enter the lithium refining business. “You can’t lose. It’s a license to print money,” he added.