Tesla Q2 results falls below expectations, drops 75% of Bitcoin

Due to plant shutdowns and a lack of raw materials, Tesla's second-quarter profit decreased by over one-third from the first quarter, the automaker announced on Wednesday.

Tesla reported that the quarter's profit was $2.3 billion, down from the first quarter's record-breaking $3.3 billion. Sales dropped from $18.8 billion in the prior quarter to $16.9 billion this quarter.

In addition, a dramatic decline in the price of Bitcoin wrecked the automobile. Early in 2021, Tesla announced that it has made a $1.5 billion cryptocurrency investment. By the end of June, Tesla said it had sold about 75% of its Bitcoin.

“The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the covid lockdowns in China would alleviate so it was important for us to maximize our cash position,”  Musk explained on Wednesday’s call.

After the bell, Tesla released its earnings, and the results caused the stock to slightly rise after trading hours.

Refinitiv estimates that earnings per share (EPS) were $2.27 (adjusted), compared to $1.81 forecasted. Revenue was $16.93 billion compared to the $17.1 billion anticipated.

Due to inflation and growing demand for battery cells and other materials used in electric vehicles, the automotive gross margin decreased to 27.9 % from 28.4 % and 32.9% last quarter. The company's overall revenues were $14.6 billion, of which $1.47 billion came from services and other revenue and $866 million from the energy division.

Profit roughly doubled as compared to the second quarter of 2021. Additionally, the quarter's earnings were higher than expected. However, investors pay closer attention to Tesla's progress—or lack thereof—from quarter to quarter as it is a fast growing company.

While conventional automakers like Toyota and General Motors experience sharp drops in sales, Tesla controls the global market for electric vehicles and is expanding. However, the just reported quarter was quite rough.

Compared to the first 3 months of the year, Tesla's vehicle deliveries dropped 18% from April through June. This is an extraordinary dip for a business that had, in recent years, consistently achieved quarterly improvements. (The deliveries increased by 26% from a year ago.)

About 40% of Tesla's sales are made in China, even though the Shanghai facility has had frequent shutdowns due to the COVID-19 pandemic and scarcity of essential parts and materials. Tesla hasn't been able to boost output as anticipated at its new factories in Austin, Texas, and close to Berlin.

Tesla has maintained its guidance for "50% average annual growth in vehicle deliveries" over a "multi-year horizon" with two additional plants already operational in Texas and outside of Berlin, Germany.

Tesla's new facility outside of Berlin manufactured more than 1,000 cars per week in June, according to CEO Elon Musk, who also predicted that Austin, Texas's new factory will soon reach the same production milestone.

Tesla reported 709 store and service sites for the period and 3,971 Supercharger locations, indicating that its charging infrastructure has expanded more rapidly than its store and service locations. These figures reflected a 19% increase in store and service center locations and a 34% increase in charging locations year over year.