Tesla reports more than $1 billion in net income in Q2

The latest Tesla earnings call reveals a tenfold increase in net income as Tesla made over one billion dollars after expenses. The company also continues to produce at capacity, amid persisting global challenges and record demand for electric cars.

Tesla reported $1.14 billion in (GAAP) net income for Q2 – the first time it has surpassed $1 billion. This is among a revenue of $11.96 billion, mostly made by selling cars. Overall automotive revenues amounted to $10.21 billion, of which only $354 million came from sales of regulatory credits – less than in any other year.

To compare, in the first quarter of 2021, Tesla generated revenue of 10.389 billion US dollars (around 8,593 billion euros) and a surplus of 438 million US dollars (around 362 million euros). Tesla said this was mainly due to lower costs as reported so that the trend continues.

In Q1, the Californian company had achieved the seventh quarterly profit in a row. Tesla is going from strength to strength here, having recorded a profit in now eight consecutive quarters with 2020 being their first profitable year since inception.

Tesla financial figures follow Q2 production and delivery record

For operations, Tesla said tonight, it had worked “extremely hard” to keep the factories in Fremont and Shanghai operating at capacity. With success, it appears, as the company’s operating margin stood at 11%, up from 5.7% in Q1. Operating margin measures how much profit a company makes on a dollar of sales. Tesla said the increase was mainly due to volume growth and cost reduction.

These positive impacts were partially offset by higher operating expenses such as ramping up the revised Model S and Model X and additional supply chain costs. In addition, Tesla also lost on the Bitcoin market after the investment had proven successful in Q1.

Still, the production and delivery figures which Tesla traditionally publishes ahead of its earnings call had suggested continued success. In Q2 2021, Tesla set new records when delivering 201,250 electric cars to customers and built 206,421 vehicles between April and June.

While the Model 3 and Model Y were solely responsible for the previous delivery record in Q1 2021 with 184,800 vehicles, the Q2 record included the Model S and X again, whose revised versions Tesla presented at the end of January. It took them until Q2 to start producing the updated versions so that the second-quarter report listed 2,340 Model S/X built and 1,890 Model S/X delivered – Tesla never breaks down the individual models but combines the two large model series and the two smaller Model 3 and Model Y. Since the revised Model X has not yet been delivered, the figures mentioned were attributable to the Model S. Tesla delivered the first units on 11 June, so the 1,890 units were delivered within 20 days.

However, in the running quarter, Tesla had stopped deliveries of said Model S without stating a reason as reported. However, in the meantime, Tesla appears to have taken up Model S deliveries again after a week hold. But, again, there was no reason given.

At the same time, in the latest earnings call, Tesla pointed to “supply chain challenges”, in particular when it comes to semiconductors. This was particularly challenging as the company saw global vehicle demand at “record levels” so that “component supply will have a strong influence on the rate of our delivery growth for the rest of this year,” according to Tesla. Again, Tesla cars made in China became a larger percentage of the mix and the company now considers Giga Shanghai its “primary vehicle export hub”.

Global outlook

Tesla operates on a target of 50 per cent annual growth for its deliveries in future, and Tesla says it likely will “grow faster” in 2021. Growth at 50% this year would mean the delivery of about 750,000 vehicles or 187,500 per quarter, assuming an unrealistically even distribution. That goal does not seem too far off, given that the Model X and S are back in the mix. Plus, if the Gigafactories in Germany and Texas come online as planned in 2021, there would be extra vehicles right there.

In today’s earnings call, Tesla states that progress was being made at Giga Austin and Giga Berlin. However, “European demand remains well above supply,” the company said, resulting in wait times for delivery. For the moment, Tesla continues to install equipment and intends to grow import volumes until production begins.

On the much expected new battery cells, Tesla said it had validated the performance and lifetime of its 4680 cells currently produced at the Kato facility in California. The company is now working to improve the 10% of manufacturing processes that were still the bottleneck production output. “While substantial progress has been made, we still have work ahead of us before we can achieve volume production,” Tesla said. The structural pack architecture with a single-piece front casting has, however, been successful.

ir.tesla (shareholder deck), electrek.co (Model S delivery restart)