- Tesla’s profits have taken a hit due to its huge investment in AI.
- Second-quarter deliveries hit a record 480,126 units this year.
- Demand has increased across Europe and through Asia Pacific.
Earlier this month, Tesla said second-quarter sales bounced back hard after large stretches of last year went sideways, landing the company a record. Then Wednesday’s Q2 earnings landed. By Thursday’s close, shares had slid 14.5 percent to $319.69, wiping out $214.5 billion of market value in one session. According to WSJ, that’s the worst single day in Tesla’s history, and the sum lost exceeds the entire current market cap of every other automaker.
Across April, May, and June of this year, Tesla produced a total of 451,758 vehicles and delivered 480,126. This represents the best Q2 result in the company’s history and was up 25 percent from the same quarter last year. The increase also followed consecutive year-over-year declines in quarterly deliveries.
Read: Three Million Teslas A Year By 2030 Is The Bet. Twenty-Three Firms Made It.
As we’ve come to expect, it was the Model 3 and Model Y that continued to make up the vast majority of Tesla’s sales. In fact, of the 480,126 deliveries it made, 467,762 were Model 3s and Model Ys, with the remaining 12,364 split across the now-discontinued Model S and X, the Cybertruck, and Semi.
Strong total sales figures were bolstered by a surge in demand across several European countries, including Portugal, Slovenia, and Lithuania, as well as strong results across Asia and the Pacific, like in Australia, South Korea, Japan, Taiwan, and Thailand. The new three-row Model Y L no doubt played a role in the surge, although Tesla hasn’t said how many it shipped and delivered during the quarter..Higher gas prices tied to the US war in Iran also pushed more European buyers toward EVs in the first half.
What About Tesla’s Financials?
Tesla’s total revenue rose 26 percent from a year earlier to $28.24 billion, beating estimates. Of this, $20.52 billion came from Tesla’s automotive segment, a 23 percent jump. The energy business, covering solar and battery storage, brought in $3.14 billion, up 13 percent, while services and other revenue rose 50 percent to $4.58 billion. Despite stronger revenue, gross margin dropped from 17.2 percent to 16.8 percent while GAAP net income fell 5 percent to $1.11 billion. Analysts had penciled in a 19.4 percent gross margin, per StreetAccount.
Several factors contributed to the profit decline. Most notably, operating expenses climbed faster than revenue due to significant investments in artificial intelligence, as well as other important research and development projects. Additionally, Tesla earned less from regulatory credits than in the past, and the average sales prices of its EVs were also down.
