Tesla published its second quarter earnings report in which the company said it earned $2.7 billion in net income on $24.9 billion in revenue. That represents a 47 percent increase year over year compared to $16.9 billion in revenue in Q2 2022.
The company’s gross margins fell to 18.2 percent for the second quarter in a row, signaling that Tesla’s rampant price cutting is continuing to take a toll on its bottom line. Gross margins were down 5.6 percent quarter over quarter and 27 percent year over year.
Investors are glum about Tesla’s profit margins, even while cheering its recent delivery report that revealed the company delivered 466,140 vehicles to customers during the past three months. That’s an 83 percent increase over the number reported by Tesla in the same quarter last year.
Investors are glum about Tesla’s profit margins
Nonetheless, the price cuts have proven popular with customers, who have been snatching up Tesla vehicles as fast as they are made. Earlier this year, the Tesla Model Y became the first EV to become the world’s best-selling vehicle.
The price cuts have forced other automakers to respond with cuts of their own. Ford has reduced prices on its Mustang Mach-E and F-150 Lightning. Meanwhile, inventory levels have risen, signaling that demand for EVs was starting to cool.
In the call with investors, Tesla CEO Elon Musk hailed the numbers as historic, but also noted that production was likely to dip in the third quarter as a result of factory closures for upgrades.
“This is, I think, an incredible achievement by the Tesla team and just a huge thank you to our customers for their support,” Musk said. “This came in spite of high interest rates, and a lot of macro uncertainty.”
“This is, I think, an incredible achievement by the Tesla team”
Tesla has recently been ramping up production at its Austin, Texas plant that will also build the Cybertruck — the first of which came off the line a few days ago — and has plans to open another plant in Monterrey, Mexico.
Tesla’s biggest victory this quarter has been the embrace by legacy automakers of its North American Charging Standard for EV charging. Ford was first to announce plans to adopt Tesla’s more streamlined EV connector, followed by GM, Rivian, Polestar, Volvo, Mercedes-Benz, and Nissan. NACS is now on its way to becoming the de facto EV charging standard for North America.
Musk provided updates about the long-delayed Cybertruck, revealing that the polarizing pickup will be under 19 feet long and compact enough to fit in a 20-foot garage. He also touted the company’s controversial Full Self-Driving software, revealing that Tesla is in talks with another automaker about licensing the driver assist technology.
He made his standard predictions about Tesla’s ability to achieve fully autonomous vehicles, claiming the system would be “better than a human” by the end of 2023. Musk is known for making predictions about autonomous driving that rarely come to pass.
“I know I’m ‘The Boy Who Cried FSD’ but I mean, I think I think we’ll be better than humans by the end of this year,” Musk said, adding, “I’ve been wrong in the past, I may be wrong this time.”