Tesla has already reported its second-quarter vehicle delivery numbers, and now its full Q2 2022 financial report (pdf) reveals it’s dealing with inflation and an overall economic downturn, combined with a drop in bitcoin prices and others cryptocurrencies. In the letter to investors, Tesla executives revealed that the company sold 75 percent of its bitcoin holdings, adding $936 million in cash to its balance sheet.
Last year, Tesla made a $1.5 billion investment in Bitcoin and announced that it would accept Bitcoin as payment. Tesla started accepting Bitcoin in late March, then reversed course in May, just 49 days later.
In the latest report, Tesla said the value of its remaining “digital assets” was $218 million, down from about $1.2 billion in previous quarters. Last July, Musk said: “I may pump, but I’m not giving up… I definitely don’t believe in raising the price and selling or anything like that. I would like to see Bitcoin succeed.”
Higher Commodity Costs and “Bitcoin Depreciation”
As for its electric car business – where new competitors seem to be announced every day – and solar products, the company reported a profit of $2.26 billion this quarter, about a 31 percent decrease from last quarter, when posted a profit of $3.3 billion. The profit was earned on $16.9 billion in revenue, which was also down from Q1, where the company reported it brought in $18.7 billion.
In terms of profitability, the company is still doing better than in the second quarter of 2021, when it made $1.1 billion on revenue of $11.9 billion. The company attributed this to several factors, including “lower inventory-based compensation costs,” more vehicle deliveries compared to last year and an improved average selling price. It’s the first full quarter since Tesla raised prices on all of its cars by as much as 10 percent and raised prices again on select models in June. Despite the price hikes, the company has broken with its trend of earning more per car each quarter. In the first quarter, its gross auto margin was 32.9 percent. This quarter it was 27.9 percent.
Tesla announced earlier this month that its deliveries had slowed, falling about 18 percent compared to Q1. It also produced about 15 percent fewer cars this quarter than in the past. In its earnings report, Tesla said it faced “limited production and shutdowns in Shanghai for most of the quarter” but that it continued to ramp up production at its new facilities in Berlin and Austin, Texas.
Other difficulties reported by the automaker are increased prices for everything from raw materials to logistics, higher fixed costs per car due to store closures in Shanghai and, of course, the aforementioned “Bitcoin devaluation.”
Compared to the last quarter, the company’s revenue from selling regulatory credits to other automakers fell nearly 50 percent. In the first quarter, it brought in $679 million from the credits, and in the second quarter, it made only $344 million. The credits help other companies that don’t produce enough “clean” vehicles to meet US and EU regulatory standards.
Culturally, it was a tumultuous quarter at Tesla. In late April, CEO Elon Musk sold billions of dollars worth of company stock to help pay for Twitter (a deal that was a huge mess and is now headed to a Delaware court after Elon tried to overturn the deal). Musk also reportedly said he had a “super bad feeling” about the economy when he announced the company’s hiring freeze and layoffs. Those layoffs affected the Autopilot team, and Tesla was accused of violating labor laws after it allegedly laid off more than 500 workers from the Gigafactory. Earlier this month, the company also lost its head of AI.
Not all the news was bad, though. Tesla’s partnership with Uber and Hertz, where qualified rideshare drivers can rent electric cars to ferry passengers around, appears to be going well based on a report from Uber in June. It also appears that 2022 will be the year non-Tesla EVs gain access to the Supercharger network in the US, based on a fact sheet released by the White House.
The company will discuss its second quarter results on a call with investors at 5:30 PM ET / 2:30 PM PT, which you can listen to here.
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