Tesla earned more than $1 billion in net income in the second quarter, more than tenfold what it earned a year ago.
Tesla announced its second-quarter earnings after the bell Monday, and both the top and bottom lines improved. After-hours, shares increased by about 2%. The following are the results.
- Earnings: $1.45 per share, compared to the expected 98 cents per share, according to Refinitiv.
- Revenue: $11.96 billion, compared to the $11.30 billion expected by Refinitiv.
The company reported (GAAP) net income of $1.14 billion for the quarter, the first time it has exceeded $1 billion. Net income was $104 million in the year-ago quarter.
Automotive revenue totaled $10.21 billion, with regulatory credit sales accounting for only $354 million, or about 3.5 percent. This is a lower credit figure than in any of the preceding four quarters. Automotive gross margins increased to 28.4 percent, the highest level in four quarters.
Tesla had already reported 201,250 electric vehicle deliveries (its closest approximation to sales) and 206,421 total vehicle production for the quarter ended June 30, 2021.
Additionally, the company reported $801 million in revenue from its energy segment, which includes solar photovoltaic and energy storage systems for homes, businesses, and utilities, a more than 60% increase over the previous quarter.
While Tesla does not disclose the number of energy storage units it sells each quarter, CEO Elon Musk recently stated in court that the company would be able to produce only 30,000 to 35,000 units at the most during the current quarter, blaming the shortfall on chip shortages.
Additionally, Tesla reported $951 million in revenue from services and other sources. The company now operates 598 stores and service centers, as well as a 1,091-vehicle mobile service fleet, a slight increase of 34% from a year ago. This compares to a year-over-year increase of 121 percent in vehicle deliveries.
A $23 million impairment charge was recorded as an operating expense under "Restructuring and other."
The company's cash position decreased by approximately 5% year over year, to $16.23 billion. The decline was “primarily due to $1.6 billion in net debt and finance lease repayments, partially offset by $619 million in free cash flow,” the company stated in its earnings statement.
Tesla's accounts payable — the money owed to suppliers and other service providers — increased 13.7 percent year over year to $7.56 billion.
Tesla faced a backlash from Chinese consumers, recalls in both China and the United States, and delays in delivering the high-performance version of its flagship sedan, the Model S Plaid.
Institutional and retail investors enquired about Tesla's plans to begin commercial production of its Cybertruck and custom battery cells, as well as how the company intends to deal with ongoing parts shortages and the rising cost of raw materials, which Musk previously lamented.
Tesla and other automakers have faced persistent parts shortages. Tesla stated in its shareholder deck that the Semi truck program would be delayed until 2022.
Musk stated during Monday's shareholder call that a "significant struggle this quarter" has been obtaining enough modules that control the airbags and seatbelts in Tesla vehicles. The company's production in Fremont, California, and Shanghai was hampered by a lack of supply.
Musk also stated that many fans have inquired as to why Tesla does not manufacture its own chips in order to avoid shortages. He added that Tesla will work with suppliers to resolve supply chain issues, laughing that "it's not as if you can just whip up a chip fab."
Due to the fact that Tesla uses many of the same semiconductors and battery cells in cars as it does in energy storage products, Musk said the company has reduced Powerwall production and sold out of Megapack battery systems for use at power plants until the end of next year.
Musk believes there is likely demand for "well over a million Powerwalls per year" and an unspecified but massive amount of Megapacks for utilities, given the push toward renewable energy. “Solar and wind energy are infrequent and, by their very nature, require battery packs to maintain a steady flow of electricity,” he explained.
Musk stated that as a strategy for resolving supply chain issues for both cars and energy storage products, Tesla will "overshoot" on cell supply for vehicles and will divert excess supply to Powerwalls and Megapacks.
Tesla Vice President of Vehicle Engineering Lars Moravy stated that production of the Cybertruck will begin in late 2021 at Tesla's new plant in Texas. Musk stressed that initial production would be limited, and he anticipates that ramping up production to a high volume will be difficult due to the vehicle's unique design. Tesla stated in its shareholder deck that Cybertruck production will begin in Texas concurrently with Model Y production.
When asked when Tesla's Supercharger DC fast-charging stations will be open to drivers of non-Tesla electric vehicles, Musk and Drew Baglino, senior vice president of powertrain and energy engineering, stated that the company's goal will be to expand its charging network sufficiently to avoid drivers experiencing longer wait times to charge their vehicles on the road.
Musk also took a moment to reassure shareholders that after this quarter, he will "no longer default" to speaking on, much less leading, Tesla earnings calls. He did, however, state that he would address annual shareholder meetings.