Photo: Tesla
Tesla released the financial data for the second quarter of the year, showing some impressive figures and beating Wall Street expectations in key areas. The price cuts have made a dent in Tesla's margins, although not as significant as some analysts thought. Still, the second half of the year will prove crucial, and there are good and bad things revealed during the Q2 2023 earnings call.
Although Tesla's second-quarter financial results beat Wall Street expectations in critical areas, other details worried investors. This led Tesla shares to lose 4% in after-hours following the presentation. Tesla had a strong quarter in terms of revenue, growing 47% over Q2 2022 to $24.93 billion. This surpassed the analysts' consensus of $24.7 billion, putting Tesla on track to report $100 billion in revenue at the end of 2023.
The non-GAAP earnings per share in Q2 was $0.91, ahead of the Wall Street expectations of $0.80. Although the gross margin slipped in the quarter, it wasn't as bad as people warned in light of the massive price cuts early in the year. Tesla reported a total GAAP gross margin of 18.2% and a healthy operating margin of 9.6%. This reflects Tesla's ongoing efforts to reduce costs and optimize manufacturing processes. The production ramp at Giga Berlin and Giga Texas also contributed, as did other Tesla lines of business, most notably Energy and Services.
More importantly, Tesla's huge pile of cash has increased by $0.7 billion in the quarter to $23.1 billion. This ensures ample liquidity to fund the product roadmap, long-term capacity expansion plans, and other expenses. Beyond the numbers, Tesla operations are growing in all directions while new lines of business finally start returning a profit. Still, not everything is golden, as clouds can spoil the show in the second quarter.
With the mixed financials and negative news out of the way, it's time to focus on the good things. The most surprising news of the conference was that Tesla would allow transferring the FSD license to another car, but only once and for a limited time, during the third quarter. This can be seen as a way to energize sales in the third quarter, as many current Tesla owners will rush to replace their cars without paying again for the Full Self-Driving capability.
Another key takeaway is that Tesla is in talks with a major carmaker to license FSD. This was long expected, but people never thought it would happen so soon. No name was mentioned, but people suspect Ford might be involved, considering it was also the first to adopt the NACS plug. Ford is also coming after the Argo AI fiasco, so it knows how hard it is to develop its own self-driving capabilities.
On the production front, Tesla confirmed that the Cybertruck is in the release-candidate phase, with first deliveries starting later this year and mass production in 2024. While this is not new, it confirms that things are going according to plan for the first time. Tesla also said that the next-generation platform is making progress and revealed that the affordable EV model would be built at several production facilities around the world. The 4680 battery cell yields also increased significantly, while cell performance improved, making a long-range Cybertruck possible.
The non-GAAP earnings per share in Q2 was $0.91, ahead of the Wall Street expectations of $0.80. Although the gross margin slipped in the quarter, it wasn't as bad as people warned in light of the massive price cuts early in the year. Tesla reported a total GAAP gross margin of 18.2% and a healthy operating margin of 9.6%. This reflects Tesla's ongoing efforts to reduce costs and optimize manufacturing processes. The production ramp at Giga Berlin and Giga Texas also contributed, as did other Tesla lines of business, most notably Energy and Services.
More importantly, Tesla's huge pile of cash has increased by $0.7 billion in the quarter to $23.1 billion. This ensures ample liquidity to fund the product roadmap, long-term capacity expansion plans, and other expenses. Beyond the numbers, Tesla operations are growing in all directions while new lines of business finally start returning a profit. Still, not everything is golden, as clouds can spoil the show in the second quarter.
Production will slow in the third quarter, but things will improve by the year's end
During the earnings call conference, Tesla warned that Q3 production would be slightly down compared to the second quarter due to Giga Shanghai and Fremont plant upgrades. This put off investors, who expected a slight increase in the next quarter. Tesla also suggested that further price cuts might be on the table, especially as interest rates keep climbing. Tesla aims to keep the payments leveled by reducing the price of its cars.With the mixed financials and negative news out of the way, it's time to focus on the good things. The most surprising news of the conference was that Tesla would allow transferring the FSD license to another car, but only once and for a limited time, during the third quarter. This can be seen as a way to energize sales in the third quarter, as many current Tesla owners will rush to replace their cars without paying again for the Full Self-Driving capability.
Another key takeaway is that Tesla is in talks with a major carmaker to license FSD. This was long expected, but people never thought it would happen so soon. No name was mentioned, but people suspect Ford might be involved, considering it was also the first to adopt the NACS plug. Ford is also coming after the Argo AI fiasco, so it knows how hard it is to develop its own self-driving capabilities.
On the production front, Tesla confirmed that the Cybertruck is in the release-candidate phase, with first deliveries starting later this year and mass production in 2024. While this is not new, it confirms that things are going according to plan for the first time. Tesla also said that the next-generation platform is making progress and revealed that the affordable EV model would be built at several production facilities around the world. The 4680 battery cell yields also increased significantly, while cell performance improved, making a long-range Cybertruck possible.
Google News