Super Tesla, Super Elon Musk: EV maker earned over $25 bn last quarter, despite lowering margins

Despite falling margins, Tesla had a blast in the last quarter, where it made over $25 billion. Tesla may very well become the most profitable car maker soon, as it is set to meet its projections this year, which will only be boosted by the Cybertruck

Tesla made $2.7 billion in profit during the second quarter, which is 20 per cent more than the same period last year. However, this increase in profit was mainly due to reducing the prices of their electric vehicles (EVs).

By doing so, they sold more cars and achieved a record of 466,140 units sold in Q2. But these price cuts also affected their overall profit margin, which decreased to 18.2 per cent in Q2, down from 25 per cent last year.

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Despite this, Tesla’s revenue matched the expectations of around $25 billion, almost 50 per cent higher than last year. Most of the revenue came from selling their cars, earning $21.3 billion, including some money from federal tax incentives.

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A smaller part of Tesla’s revenue, referred to as “services and other revenue,” came from vehicle services, retail merchandise, vehicle insurance, and the Supercharger network. Speaking of which, Tesla expanded its Supercharger network by 33 per cent in Q2, now having 5,265 stations and 48,082 connectors. They even opened up this charging network to other automakers like Ford, General Motors, and Nissan.

In terms of energy generation and storage, Tesla’s revenue remained stable compared to the previous quarter but increased by 74 per cent compared to the previous year.

Margins drop slightly, but Tesla isn’t worried
Tesla’s operating margin slightly dropped from 11.4 per cent to 9.6 per cent in Q2, and their capital expenditures remained flat compared to the previous quarter but increased by 19 per cent year-over-year. They spent $2 billion on capital expenditures, mostly due to production ramping up in their factories in Berlin and Texas.

Despite these financials, Tesla ended the quarter with $1 billion in free cash flow, an increase from the previous quarter’s $441 million.

Tesla’s stock price closed at $291.26 on Wednesday and dropped by 5 per cent in after-hours trading.

Outlook stays positive
Tesla’s full-year outlook remains unchanged, and they expect to stay ahead of a long-term growth rate of 50 per cent with approximately 1.8 million vehicles delivered in 2023, as stated in their earnings report.

In the first quarter of the year, Tesla delivered 422,875 vehicles globally. In the second quarter, this number increased by 10 per cent to 466,140 units. If they keep increasing production and deliveries at a similar pace, they could reach close to 2 million units by the end of the year.

However, Elon Musk mentioned that production in Q3 will slightly decrease due to planned factory upgrades. He also acknowledged that uncertain economic conditions could affect their performance in the near future.

Regarding the price cuts, Musk explained that they were implemented to counter the potential impact of lower sales during uncertain economic times, especially when interest rates rise significantly, which could increase the overall cost of owning a car.

To boost sales, Tesla reintroduced its referral program, which rewards customers for referring new buyers.

The boost from Cybertruck
Over the weekend, Tesla finally managed to build its long-awaited Cybertruck at Giga Austin. However, the company didn’t share many details about it during the Wednesday earnings report, leaving investors and analysts wanting more information.

Elon Musk, the CEO of Tesla, mentioned that it’s challenging to predict the initial production ramp, but he expects to start manufacturing the Cybertruck in high volume next year and plans to begin deliveries this year.

Musk also highlighted that the demand for the Cybertruck is incredibly high, using the phrase “demand is so far off the hook, you can’t even see the hook.” He pointed out that the vehicle incorporates a lot of new technology, which may affect the speed of production as it depends on the slowest and least certain parts of the supply chain.

Despite this excitement and demand, Tesla didn’t provide any other specific details about the Cybertruck, such as its production capacity for next year, pricing, or additional specifications.