Last year, Tesla made a $1.5 billion investment in Bitcoin and announced that it would accept Bitcoin as payment. Tesla started accepting Bitcoin in late March and then abruptly reversed in May, just 49 days later.
In the latest report, Tesla says the value of its remaining “digital assets” is $218 million, which it had reported at about $1.2 billion in previous quarters. Last July, Musk said: “I may pump, but I don’t dump… I certainly don’t believe in driving the price up and selling or anything like that. I’d like to see Bitcoin succeed.”
High Cost of Raw Materials and “Bitcoin Decline”
In its electric car business – where new competitors seem to be announced daily – and solar products, the company reports that it made $2.26 billion in profit this quarter, down about 31% from last quarter when it posted a profit of 3, 3 billion dollars. The profit came on revenue of $16.9 billion, which is also down from the first quarter, where the company reported revenue of $18.7 billion.
In terms of profitability, the company is still doing better than in the second quarter of 2021, where it earned $1.1 billion on revenue of $11.9 billion. The company attributes this to several factors, including “lower stock-based compensation expense,” more vehicle deliveries compared to last year and an improved average sales price. This is the first full quarter since Tesla raised prices on all of its cars by up to 10 percent and raised prices again on select models in June. Despite the price hikes, the company has broken its trend of earning more per car each quarter. In the first quarter, the gross margin for the automotive industry was 32.9%. This quarter, it was 27.9 percent.
Tesla announced earlier this month that its deliveries have slowed, falling about 18% compared to the first quarter. It also produced about 15 percent fewer cars this quarter than last quarter. In its earnings report, Tesla says it faced “restricted production and disruptions in Shanghai for most of the quarter” but continued to ramp up production at its new facilities in Berlin and Austin, Texas.
Other difficulties cited by the automaker are increased prices on everything from raw materials to logistics, higher fixed costs per car due to the shutdown in Shanghai and, of course, the aforementioned “Bitcoin decline.”
Compared to last quarter, the company’s revenue from selling regulatory credits to other automakers fell nearly 50 percent. In the first quarter, it brought in $679 million in credits, and in the second quarter, it earned only $344 million. The credits help other companies that don’t make enough “clean” vehicles to meet regulatory standards in the US and EU.
Culturally, it was a troubled quarter at Tesla. In late April, CEO Elon Musk sold billions of dollars worth of company stock to help pay for Twitter (a deal that was a huge mess and is now headed to the Delaware District Court after Elon tried to void the deal). Musk also reportedly said he has a “super bad feeling” about the economy when he announced the hiring freeze and layoffs at the company. Those layoffs affected the Autopilot team, and Tesla was accused of violating labor laws after allegedly letting more than 500 Gigafactory workers go. The company also lost its head of AI earlier this month.
However, it wasn’t all bad news. Tesla’s partnership with Uber and Hertz, where qualified drivers can rent the electric vehicles to ferry passengers, appears to be going well based on an Uber report in June. It also appears that 2022 will be the year that non-Tesla electric vehicles gain access to the Supercharger network in the US, according to a White House newsletter.
The company will discuss its second quarter results on an investor call at 5:30 p.m. ET / 2:30 p.m. PT, which you can listen to here.
