Montage: EV

Tesla Earnings: $16.9B of Total Revenue and 14.6% of Operating Margin

Written by Cláudio Afonso | | LinkedIn | Twitter

The U.S. automaker Tesla announced on Wednesday its second quarter earnings results reporting total revenue of $16.9 billion, up 42% year-over-year and a 14.6% operating margin. As of the end of the quarter, the automaker converted approximately 75% of the Bitcoin purchases into fiat currency.

“Our operating income improved YoY to $2.5B in Q2, resulting in a 14.6% operating margin. Quarter-end cash, cash equivalents, and short-term marketable securities increased sequentially by $902M to $18.9B in Q2, driven mainly by free cash flow of $621M, partially offset by debt repayments of $402M. As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet”, Tesla said.

Tesla Comments

We continued to make significant progress across the business during the second quarter of 2022. Though we faced certain challenges, including limited production and shutdowns in Shanghai for the majority of the quarter, we achieved an operating margin among the highest in the industry of 14.6%, positive free cash flow of $621M and ended the quarter with the highest vehicle production month in our history. New factories in Berlin-Brandenburg and Austin continued to ramp in Q2. Gigafactory Berlin-Brandenburg reached an important milestone of over 1,000 cars produced in a single week while achieving positive gross margin during the quarter. From our Austin factory, the first vehicles with Tesla-made 4680 cells and structural battery packs were delivered to our U.S. customers. We are continuing to invest in capacity expansion of our factories to maximize production. The Energy business made meaningful progress in Q2 as well, achieving higher volumes with stronger unit economics. This resulted in an overall record gross profit. Customer interest in our storage products remains strong and well above our production rate. With each of the Fremont and Shanghai factories achieving their highest-ever production months and new factory growth, we are focused on a record-breaking second half of 2022.

In terms of production, Tesla says it achieved “record production rates across the company”. However, the company warned of “continuation of manufacturing challenges related to shutdowns, global supply chain disruptions, labor shortages and logistics and other complications, which limited our ability to consistently run our factories at full capacity”.

US: California and Texas

Our Fremont Factory made a record number of vehicles in Q2. We see opportunities for further production rate improvements. In Texas, we have added flexibility to produce vehicles with either a structural battery pack or legacy battery pack. The next generation of 4680 battery cell machinery has been installed in Texas and is in the process of commissioning. Factory output in Texas continues to grow.

China: Shanghai

While the Shanghai factory was shut down fully and then partially for the majority of Q2, we ended the quarter with a record monthly production level. Recent equipment upgrades will enable us to continue to increase our production rate further.

Europe: Berlin-Brandenburg

Thanks to strong production rate improvement towards the end of Q2, our team in Germany produced more than 1,000 Model Y vehicles in a single week, using 2170 cells. We expect the production rate to continue improving through the rest of the year.

The company started Monday rolling out the 10.13 version of its Full Self Driving (FSD) technology bringing improvements related to in-lane positioning on wide residential roads, lane recall, animal detection recall, and more. In early June, the CEO Elon Musk tweeted the version would “smooth out intersection control, especially long lefts, and starts to handle roads with no map data at all”.

Written by Cláudio Afonso | | LinkedIn | Twitter