Tesla (TSLA) Second Quarter 2023 Earnings

Tesla report income After the bell, record quarterly sales were recorded, but margins were lower thanks to price cuts and incentives.

Shares were flat after the initial reports, but began to fall during earnings calls after CEO Elon Musk and other executives failed to provide precise specifications and delivery dates for the Cybertruck and robo-taxis-enabled vehicles. Musk and other executives also said in a phone call that shutdowns for factory improvements would slow down car production in the third quarter. After hours, it is down about 5%.

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The company’s results against expectations are as follows.

• Earnings: $24.93 billion, compared to a forecast of $24.47 billion by Refinitiv.
• Earnings: Adjusted to 91 cents per share, compared to Refinitiv’s estimate of 82 cents per share.

Net income (GAAP) was $2.7 billion, up 20% year-over-year. Meanwhile, operating profit fell 3% year-over-year to $2.4 billion.

By comparison, in the first quarter of 2023, Tesla reported a net profit of $2.51 billion on revenue of $23.33 billion.Between Second quarter Tesla reported last year net income Sales were $16.93 billion, $2.27 billion.

“We are still targeting 1.8 million deliveries this year, but we expect production to drop slightly in the third quarter due to the summer break for many factory renovations,” Musk said at the company’s earnings call.

early this month, Tesla reported Total 466,140 vehicle delivery The company announced that it produced 479,700 electric vehicles in the second quarter. Shipments are the closest to Tesla’s reported sales figures.

These deliveries exceeded Wall Street expectations and were driven in part by incentives and discounts. Correspondingly, the operating margin he recorded was 9.6%, the lowest in at least five quarters. Total gross margin was 18.2%, also the lowest for the quarter.

In a shareholder statement, Tesla said the decline in second-quarter profit margins was due to factors such as lower average selling prices “due to mix and pricing” of the cars it sells and the cost of ramping up production of its own-designed battery cells, known as the 4680 cells.

Revenue from Tesla’s core automotive business grew 46% year-over-year to $21.27 billion, up about 6.5% quarter-on-quarter. Energy generation and storage revenues from photovoltaic installations and backup batteries increased 74% year-on-year to $1.51 billion. With more vehicles on the road, Tesla’s “service and other” revenue, which includes out-of-warranty vehicle repairs, rose 47% to $2.15 billion.

Asked whether investors could expect Tesla’s gross margins to stabilize or rise in the near term due to price cuts and factory upgrades, Mr. Musk countered. “Short-term fluctuations in gross margins and profitability are actually marginal compared to long-term conditions. Autonomy makes all these numbers look ridiculous.”

Tesla’s R&D spending rose to $943 million ($771 million in the first quarter), and the company noted in its shareholder documents that it was focused on “being at the forefront of AI development” and had begun production of Dojo’s “training computer.”

Tesla’s Model Y crossover is the world’s best-selling car in the first quarter of 2023.

In an investor note, Tesla said Cybertruck’s “factory tools” are on track, but the company is only producing “release candidate” builds for now. The news could disappoint fans who were eagerly awaiting the start of deliveries of Elon Musk’s angular, sci-fi-inspired pickup truck, first touted in 2019. Tesla recently posted a photo on Twitter through its social media accounts of factory workers crowding around a Cybertruck at its Austin, Texas, facility. The tweet read, “First Cybertruck built in Giga Texas!”

Musk said on the earnings call that the Cybertruck will be loaded with “new technology” with 10,000 “unique parts and processes.” Tesla cautioned that “it’s always hard to predict growth at first,” but said the Cybertruck “will be in mass production next year and delivered this year.”

Musk also said Tesla will invest more than $1 billion in Dojo over the next year. Dojo is a supercomputer Tesla is developing for his AI machine learning and computer vision training. Tesla collects video clips and data from customers and company vehicles to improve existing software and develop new features that become part of driver assistance systems.

“I see a lot of AI companies doing LLMs and stuff like that, and I’m thinking, if they’re so great, why can’t they build self-driving cars? Because it’s harder.”

Musk has promised Tesla to have self-driving cars since at least 2016, when he promised in 2017 that Tesla would be able to complete a transcontinental trip without driver intervention. So far, it hasn’t happened yet. Marketed in the U.S. as Autopilot or fully autonomous, the company’s driver assistance systems require a human driver to steer and brake at all times.

“I know I’m the boy who shouted FSD,” Musk said during a question-and-answer session on Wednesday’s conference call. “But I think we will be better than humans by the end of this year.” He said Tesla is focused on developing self-driving technology for the U.S. market.

In more futuristic terms, Musk talked about combining Neuralink brain implants with Tesla’s robotic arms or legs. Regarding amputees, he said: “we, [them] An incredibly capable cyborg body, a $6 million man in real life, but it doesn’t cost $6 million,” he joked, saying, “$16,000 man.”