Tesla hit $25 billion in Q2 revenue, but margins declined amid price cuts

Tesla reported Wednesday’s net profit was $2.7 billion in the second quarter, up 20% from the same period last year once again, slashing the company’s EV prices turned a profit. The automaker has repeatedly reduced the cost of its four EV models in the United States, Mexico, Europe and China. The move helped boost sales in the first half of the year, with Tesla achieving a record Q2 shipment of 466,140 units. But it’s also taken from Tesla’s usually healthy automotive margins.

For the second time this year, Tesla’s gross margin fell to 18.2%, down from 25% in Q2 2022 and down from 19.3% in the last quarter.

Tesla matched Wall Street’s revenue estimates of around $25 billion for the quarter, which is almost 50% higher than last year’s sales of $16.9 billion. Most of the revenue comes from Tesla’s auto revenue, which hit $21.3 billion in Q2. That number includes $282 million of federal tax incentives.

A small, but important, portion of Tesla’s Q2 revenue came from “services and other revenue,” which typically includes after-sales service and vehicle parts, retail merchandise, auto insurance, and the Supercharger network.

The number of Tesla Supercharger stations and connectors increased 33% in the second quarter to 5,265 and 48,082 respectively. The automaker has opened up its Supercharger network to other automakers in recent months, most notably Ford and General Motors, and more recently. Nissan. While charging isn’t Tesla’s main revenue driver, it’s possible that some of the increase will come from Tesla opening up its charging network.

Energy generation and storage revenue remained flat quarter-over-quarter, but grew 74% year-over-year.

Tesla’s operating margin fell slightly from 11.4% in Q1 to 9.6% in Q2. QoQ capex remained flat but increased 19% YoY. The company reported spending $2 billion in capex, likely due to steadily increasing production at the automaker’s gigafactories in Berlin and Texas. Tesla’s Q2 earnings show that Berlin’s vehicle capacity increased by 25,000 units from the figure reported in Q1.

Tesla closed the quarter with $1 billion in free cash flow, which was up from $441 million in the first quarter.

Tesla shares closed at $291.26 on Wednesday and remained mostly flat in after-hours trading.

The EV maker will host a call with analysts and investors Wednesday night at 5:30 p.m. ET, where listeners will expect to hear more about Tesla’s Cybertruck. The first Cybertruck rolled off the production line at the Giga Austin last week, but few details have been shared. The earnings report also lacks Cybertruck information, stating only that Tesla remains committed to having pickups available this year.

Tesla’s full year outlook has not changed.

“For 2023, we expect to stay ahead of a long-term 50% CAGR of approximately 1.8 million vehicles for the year,” Tesla’s earnings report said.

This story is still developing.

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