Highlights
- Vehicles production represents an increase of 25% (258,580 vehicles) vs Q2 2021but came in below estimates.
- Slowest vehicle production growth since Q2 2020 (Onset of the pandemic).
- Company commented that the production in June 2022 was the highest ever.
- Automotive margin decreased as a result of inflation and shortages of EV components in the market.
Financial Results
Pretty mixed results relative to market consensus, with adjusted EPS beating estimates with a 56.6% increase vs 2Q 21. Revenue rose 41.6% YOY matching analysts’ estimates. The reason behind the increased as communicated by the company is:
- Increase in vehicle deliveries
- Average selling price
- Growth in other business segments; (i) Services and Other (ii) Energy generation and Storage
However, cost has also increased as a result of inflation. Prices of raw materials, logistics and the shutdown of the company’s factory in Shanghai negatively impacted profitability of the company.
Tesla Revenue by Segment
Tesla EPS History
- Tesla EPS for the quarter ending June 30, 2022 was $1.95, a 91.18% increase year-over-year.
- Tesla EPS for the twelve months ending June 30, 2022 was $8.30, a 330.05% increase year-over-year.
- Tesla 2021 annual EPS was $4.9, a 665.63% increase from 2020.
- Tesla 2020 annual EPS was $0.64, a 165.31% decline from 2019.
- Tesla 2019 annual EPS was $-0.98, a 14.04% decline from 2018.
Vehicle Production
Vehicle production of 258,580 was 25.3%higher versus a year ago. Core business of Tesla is making EVs and thus, need to continually expand its production to grow both revenue and profits, Production of Model S/X vehicles increased over 600% but the Model 3/Y production slowed to 19% growth YOY.
Bitcoin Holdings
The company did not say much about its Bitcoin holdings except that they have sold 75% of its holdings. The sale added $936m of cash into their balance sheet. Overall, the company’s cash and cash equivalent increased by $847m during 2Q 2022, thus if we took away the share of the Bitcoin sales, the cash and cash equivalent decreased by $89m for the quarter.
The reason cited by CFO Zachary Kirkhorn and Musk for the sale was to shore up their cash position, and should not be taken as a view on Bitcoin’s future. They have continued to hold their Dogecoin’s position.
Company’s Guidance
The company indicated that they will be looking to grow its manufacturing capacity as fast as possible with a soft guidance of 50% average annual growth in vehicle deliveries over a multi-year time horizon. Efforts to reduce cost across the company’s manufacturing and operations is likely lead to an acceleration of its revenue going forward. The company lately announced its intention to cut 10% of jobs.
The company also cited its new factories in Berlin-Brandenburg and Austin as key in increasing production capacity.
Tesla still counts its hotly anticipated Cybertruck (announced in Nov. 2019), electric Semi truck (unveiled in Nov. 2017), updated Roadster concept (also unveiled in Nov. 2017), and other speculative projects like the humanoid robot as “in development.” On Wednesday, in response to an investor’s question, Elon Musk said Tesla is hoping to start delivering the Cybertruck, an experimental looking pickup, in the middle of next year.
Company’s Headwinds
Inflation continues to be a concern for the company. In May, Musk commented on the high costs of starting up its production as its new facilities in Austin, Texas and Grünheide in Brandenburg, Germany. However, earlier in June, Musk tweeted that the company could lower its vehicles’ selling price if inflation eases. On its earnings call last Wednesday, Tesla CFO Zachary Kirkhorn said that their margins will continue to face pressure for the rest of 2022 as a result of Austin and Berlin’s facilities early inefficiencies, but expected to ease as the company ramp up on its production at these facilities.
Musk also commented that he expects the inflation to ease towards the end of the year but warned against taking his views seriously.
