The company said it was on track to produce new vehicles, including more affordable models, in the first half of 2025, although the models will result in achieving less cost reduction than previously expected.

Tesla’s quarterly results

Tesla earnings per share: 52 cents adjusted vs 62 cents expected, per LSEG consensus estimates.

Tesla revenue: $25.50 billion vs. $24.77 billion expected by LSEG

Revenue increased 2% from $24.93 billion a year earlier, Tesla said in an investor deck on Tuesday. But automotive revenue dropped 7% to $19.9 billion from $21.27 billion in the same quarter a year ago. Auto revenue included regulatory credits of $890 million, more than triple the figure from last year.

The company said it “recognized record regulatory credit revenues in Q2,” pointing to the fact that other automakers are “still behind on meeting emissions requirements.”

After a rocky first half of the year that saw Tesla cut more than 10% of headcount, the company reported better-than-expected deliveries for the Q2 earlier this month. However, deliveries were still down from a year earlier for a second straight period.

Tesla’s self-driving technology

Musk has been promising since about 2016 that Tesla will turn its existing EVs into self-driving vehicles with software updates, which the company calls Full Self-Driving. Tesla is separately working on a CyberCab dedicated robotaxi.

On Tuesday’s call, Musk said he doesn’t foresee regulatory hurdles to rolling out Tesla’s self-driving technology to a broad market in the U.S. and beyond.

He also referred to Waymo’s commercial robotaxi services as “limited” and “fragile.” Tesla’s system, he said, should be able to work anywhere in the world, not just in a geographically-limited area.

Competition for Tesla

Tesla remains the top seller of electric vehicles in the U.S. by far, but is losing market share to a growing number of rivals due in part to its aging lineup of sedans and SUVs and the impact of Musk’s incendiary and political commentary.

During the quarter, Tesla offered discounts and other incentives, including subsidized financing deals, in China and the U.S. to spur demand. Those deals hit the company’s profitability, with its adjusted earnings margin falling to 14.4% from 18.7% in the Q2 of 2023.

Musk told analysts on a conference call that new competitors “have discounted their EVs very substantially, which has made it a bit more difficult for Tesla.”

Rival automakers saw a 33% year-over-year jump in fully electric vehicle sales in the U.S. during the first half of 2024, while Tesla sales dropped by 9.6% in that time frame, as per report.

Tesla’s net income

Net income at Tesla declined 45% to $1.48 billion, or 42 cents a share, in the Q2 from $2.7 billion, or 78 cents a share, a year earlier.

During the Q2, Tesla increased production of its newest model EV, Cybertruck which the company now says is “on track to achieve profitability by end of year.”

Capital expenditures in the quarter increased 10% from a year ago to $2.27 billion. The company said it incurred $600 million in expenses for artificial intelligence infrastructure.

Tesla’s Robotaxi

Musk over the years has promoted Tesla as a technology company, most recently saying self-driving technology was key. Tesla said on Tuesday the “timing of Robotaxi deployment depends on technological advancement and regulatory approval.” But Musk said during the conference call, “I don’t think regulatory approval will be a limiting factor.”

Musk said Tesla has delayed the unveiling of its Robotaxi product to Oct. 10 from Aug. 8 to make some important changes to the robotaxi.

Tesla said Cybertruck production “remains on track to achieve profitability by end of year.”

Tesla said it has started validation of its first prototype Cybertruck vehicles using its breakthrough battery manufacturing technology.

Tesla’s stock update

Shares of Tesla have surged more than 30% since June 13, when shareholders voted to approve Musk’s $56 billion pay package that was invalidated by a Delaware court in January. Its shares were also boosted by hopes for robotaxis. Tesla shares are down about 0.5% for the year at Tuesday’s close, while the Nasdaq is up about 20% over that stretch. Tesla share price was down more than 8% in extended trading closing at $227.23.

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Tesla’s price cut impacted profit

Net income for the Q2 surged 20 percent to $2.7 billion while total revenue, including its solar business, gained 47 percent to $24.9 billion.

When Tesla’s profit report was shared on Wednesday, Wall Street analysts were expecting its automotive gross margin to come in at around 20%, according to the average of estimates compiled by Bloomberg. That would be a drop in Tesla’s profit from around 28% in the same period a year ago.

Vehicle production rose 86 percent to nearly 479,700 vehicles while deliveries were up 83 percent to 466,140 units.

But Tesla’s profit fell in the Q2 from the previous three months, squeezing Tesla’s price cut, efforts to boost sales.

Tesla facing scrutiny

Tesla’s considerable price cut on its vehicles have helped boost sales for Tesla but have weighed in on Tesla’s profitability. With the stock trading at 70 times forward earnings compared to around 5.8 times for General Motors Co. and about 8 times for Ford Motor Co. Tesla faces scrutiny as to how it can maintain the lead in a market of slowing sales and rising inventories.

Ivana Delevska, chief investment officer at SPEAR Invest, said in an interview. “If Tesla can’t deliver on margins, the rally could stall out, as Tesla’s investors would question the strategy to cut prices.”

Under pressure from increasing competition and an uncertain economy, Tesla’s price cut, increased discounts with other incentives to reduce inventory were introduced.

Market valuation of Tesla

Tesla’s price cut along with government tax breaks for EV buyers in the U.S. and elsewhere, ate into Tesla’s profit whose margins have long been the envy of the auto industry.

Tesla reported gross margin of 18.2 percent for the April-June period, compared with 19.3 percent for the Q1. Gross margin in the Q2 of 2022 was 25 percent.

Tesla said it was focusing on reducing costs and on new product development, and that the “challenges of these uncertain times are not over.”

The company said lower raw-material costs and government tax credits helped with Tesla’s price cut for vehicle.

The company did not break out its automotive margin, a closely watched gauge of Tesla’s profitability which was more than 30 percent at the start of last year.

On an adjusted basis, Tesla earned 91 cents per share. Tesla analyst estimates a profit of 82 cents per share, according to Refinitiv IBES data.

Tesla’s profit may end up being a sideshow if Elon Musk, the CEO gives Tesla investors highly anticipated updates on new products, refreshes of existing vehicles and AI. A sign that margins can start improving from here on can also provide another boost to the stock. Wedbush analyst Daniel Ives expects Tesla’s Q2 revenue to mark the trough for margins.

Tesla reiterated that it expects to achieve deliveries of around 1.8 million vehicles this year.

Tall order

The automaker had predicted in October it would sell every car it manufactured in the foreseeable future but in the Q2 it produced 13,560 more vehicles than it delivered. That number, though, was narrower than Q1 revenue.

Tesla said global inventory is now 16 days of supply, up from 15 days last quarter and four days a year ago.

Tesla Cybertruck

Analysts have said new models, such as the Cybertruck, could help Tesla maintain its extraordinary sales-growth rate. However, the long-awaited truck likely will not be available in large volumes until next year. The first Cybertruck rolled off the line in Tesla’s Austin factory just recently, the company said over the weekend.

Stock at closing

Tesla analyst estimates average profit for the three months ended in June has dropped by 26% since mid-January. Those slumping expectations contrast sharply with the more than 140% rally in the stock this year that has lifted market valuation of Tesla above $940 billion. The shares are trading up as much as 1.4% Wednesday ahead of the results.

The post Tesla Profit Down, Market Valuation Up, Faces Scrutiny appeared first on Industry Leaders Magazine.

“We were able to substitute alternative chips, and then write the firmware in a matter of weeks,” Elon Musk, the co-founder and CEO of Tesla Inc, said. “It’s not just a matter of swapping out a chip; you also have to rewrite the software.”

Tesla Q2 earnings top estimates after record deliveries

The ‘chip swap’ has helped the electric automaker maintain high levels of production, delivering over 201,250 vehicles in the second quarter of 2021. Tesla’s revenue was $11.9 billion in the quarter, including $1.1 billion in profit.

Elon Musk has described Tesla’s profit benchmark as “really an incredible milestone,” while cautioning that the automaker’s growth rate for the rest of the year “will be determined by the slowest part of our supply chain.”

The automaker has set itself an industry leader with a growing portfolio of electric vehicles ahead of traditional players like Ford Motor Co. and General Motors. Analysts have cautioned that the company faces stiff competition from new models being launched by GM, Volkswagen and other companies.

The rise in Tesla earnings doesn’t mean the automaker is immune to the global chip shortages that is hurting its deep-pocketed rivals. The electric automaker disclosed that it will delay the launch of a highly anticipated semi truck AKA the Tesla Semi to some time next year. The Palo Alto, California, company warned that the availability of chips will determine whether it will be able to maintain the production pace so it is able to deliver more than 800,000 vehicles by the end of 2021. The number would be a significant increase from nearly 510,000 vehicles delivered last year, when Covid-19 restrictions during the early stages of the pandemic forced the automaker to temporarily shut down its California factory.

The pandemic uncertainty may have dampened some of the investor response to Tesla’s earnings.

Tesla’s stock gained more than 2% during extended trading on Monday after the Q2 2021 results came out. The electric automaker’s stock has fallen about 25% from its peak price about six months ago.

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