not great, bob, not great —
Tesla’s status as a growth stock will require some explaining if this keeps up.
Jonathan M. Gitlin
– Jul 23, 2024 9:19 pm UTC
Enlarge / Will investors care that Tesla’s car sales and profit margins are shrinking, not growing?
Karol Serewis/SOPA Images/LightRocket via Getty Images
Tesla posted its second-quarter financial results ahead of an investor call this afternoon. Earlier this month, it released its Q2 2024 production and delivery numbers, which showed a 14.4 percent year-over-year reduction in the number of cars it built and a 4.8 percent reduction in sales compared to the same three months in 2023. Now, we can see the effect that a shrinking average sales price has had on the automaker’s balance sheet.
Automotive revenues dropped a little more than deliveries, down 7 percent year over year to $19.9 billion—Tesla’s price cuts since last year will have contributed to that. The good news for Tesla is that it doubled its sales of batteries and solar, deploying 9.4 GWh of batteries in Q2, which brought in $3 billion in revenue.
Lots more carbon credits
Tesla also saw a healthy increase in regulatory credits, where other automakers pay the company in order to count some of its EVs toward their own fleets. This exchange allows other companies to continue polluting rather than selling more efficient vehicles. The credits more than tripled compared to 2023—Tesla raked in $890 million in credits for Q2 2024.
Together, that helped overall revenues grow by 2 percent year over year to $25.5 billion, with a gross profit of $4.5 billion (a 1 percent increase year over year). But once generally accepted accounting principles are applied, net profits fell by 45 percent year over year to $1.5 billion. The company’s operating margin—once the envy of the industry—dropped 33 percent year over year to just 6.3 percent.
Tesla’s operating expenses have jumped 39 percent year over year to $3 billion a year, and its capital expenditures increased by 10 percent over the same timeframe, but encouragingly, compared to last quarter, its net cash and free cash flow appear far healthier. (Both have increased year over year as well.)
Although Tesla CEO Elon Musk has repeatedly claimed that Tesla is now an AI company, there was little mention of how AI will contribute to the company’s coffers in the coming years, beyond the fact that it expects its “hardware-related profits to be accompanied by an acceleration of AI, software, and fleet-based profits.”
However, Tesla said that it plans to start production on new vehicles during the first half of next year, “including more affordable models.” These will apparently use a mishmash of Tesla’s current vehicles and a next-generation platform that the automaker is still designing.
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