Tesla Model S

The second quarter of the year saw automaker Tesla pocket a total of $2.7 billion in net income, marking an increase of 20% from the corresponding quarter in the previous year. While the company’s normally healthy automotive margins took a hit during the period – owing to several price cuts and incentives – the EV giant managed to clock an operating margin of 9.6% and operating income of $2.4 billion.

Tesla, for the second quarter of the year, did manage to beat Wall Street’s estimates for its revenue – beating estimates of $24.47 billion to reach $24.93 billion for the quarter, marking a growth of 47%. Its earnings per share (EPS) exceeded estimates of 82 cents/share to amount to 91 cents/share for the same period. The majority of Tesla’s revenue comprises of its automotive revenue, which amounted to $21.3 billion in the second quarter, including $282 million from federal tax incentives.

Tesla’s stock closed at $291.26/share on Wednesday and dropped by 5% in after-hours trading. Nonetheless, the company’s war chest continued to grow in the second quarter – the automaker’s cash, cash equivalents, and investments at the end of the quarter increased sequentially by $700 million to amount to $23.1 billion in Q2 2023.

The company’s gross margin clocked a decline for the second quarter in a row (a drop from 25% in Q2 2022 and a decrease from 19.3% last quarter), while the company witnessed record Q2 deliveries of 466,140 units of its EVs during the quarter – marking an increase of 83% from the deliveries clocked by Tesla in the corresponding quarter in the previous year. Tesla maintained that this strong growth in deliveries came on the backs of the performance of its Shanghai and Freemont factories, as well as its new ones.

Coming to the performance of Tesla’s business units, we find that the company’s core automotive business clocked a strong performance during the second quarter of the year. Its revenue rose by 46% YoY to reach $21.27 billion, while revenue from its energy generation and storage unit clocked a spectacular growth of 74% to reach $1.51 billion. Tesla’s “services and other” revenue was another area to clock growth for the quarter, rising by 47% to amount to $2.15 billion.

For those who need a refresher, price cuts of Tesla’s four EV models were a frequent occurrence in the US, China, Europe, and Mexico, ensuring that consumers continued to buy Tesla vehicles in droves and forcing automakers like Ford to introduce price cuts of their own during the period. In fact, the Model Y swiftly rose to become the best-selling vehicle across the globe in the first quarter of the year. Tesla chief Elon Musk announced in the investor call that it was “an incredible achievement by Tesla team,” which came “in spite of high interest rates, and a lot of macro uncertainty.”

“We continue to target 1.8 million vehicle deliveries this year, but expect Q3 production will be a little bit down because we’ve got summer shutdowns for a lot of factory upgrades,” Musk said on the earnings call. Going forward, however, Musk believes that the production of its vehicles is likely to drop in the third quarter, especially since the company’s factories are being closed for upgrades. The production of the company’s highly-anticipated Cybertruck is on schedule as well – Tesla noted in its Q2 2023 report that the initial production is set to commence at its Texas Gigafactory later this year.