Tesla reported second-quarter revenue of $16.9 billion and earnings per share of $2.27, exceeding Wall Street projections for both figures.
It also outperformed forecasts for profit, coming in at $2.3 billion (against a $1.9 billion estimate). Despite this, the figure still falls short of Tesla’s year-long streak of record quarterly profits, since it was down 30% from the prior quarter.
With COVID shutdowns at its Shanghai Gigafactory, a global stock market crisis, and an early round of corporate layoffs, Tesla has had a challenging year.
Investors are now examining the company’s quarterly profits to determine whether the second half of 2022 will be stronger than the first.
Shutdowns were particularly expensive for the electric car manufacturer as COVID case numbers rose and China’s zero-tolerance policy tightened. The company attempted to restore production at its Shanghai factory in late March after it was shut down for three weeks. The factory regularly produces half a million automobiles annually (for which it supplied workers with sleeping bags, pop-up showers, and cafeteria meals so that they could live at the plant without any outside contact). Each day of the stoppage may have cost Tesla 2,000 to 3,000 units in delayed production, amounting to 63,000 unfulfilled orders for cars, according to some expert estimates.
The production setback occurs at the same time as Tesla has been battling a global scarcity of semiconductor chips for more than a year.
But because of those lost weeks and the ongoing uncertainty surrounding the closed-loop system’s ramp-up, it is still impossible to know with certainty how Wednesday’s earnings report will turn out. Some experts predict a quarterly revenue decline of 12% and a quarterly profit decline of 42%; the analysts attribute the narrower profit margins to the growing cost of raw materials like nickel.
The $1.81 earnings per share and $16.5 billion in revenue are the current Wall Street consensus projections.
According to the CEO of one research organisation, “the expectations are very low for the quarter.”
Elon Musk, the CEO of Tesla, may have made the claim. Musk admitted to having a “poor feeling” about the economy in emails that were leaked and were reported by Reuters in June. At the time, the economy had already seen major indices like the S&P 500 decline by more than 1,000 points this year, amounting to some of the largest losses in decades. The emails went on to suggest a global hiring halt and a 10% cut in salaried staff.
Several weeks later, the company’s San Mateo office was closed along with the initial wave of cuts. These employees were in charge of verifying whether Tesla’s Autopilot system accurately spotted items including trees, street signs, and traffic lanes, according to Bloomberg sources.
In a separate interview from later in June, Musk stated that Tesla’s brand-new plants in Austin and Berlin were still “gigantic money furnaces right now. It sounds like money is on fire and makes a huge roaring noise.
Analysts are hopeful that Tesla can salvage the situation in the second half of the year, though. Much of it may depend on how quickly its Shanghai factory can catch up and how well the new factories in the United States and Europe can operate. The business claims that June had “the highest vehicle production month in Tesla’s history,” signalling that it has already started to recover.
Even still, quarter-over-quarter deliveries decreased to 254,000 units, marking the first decline since 2020.
The rivalry in the market, which now includes established car heavyweights, is another challenge for it. Ford revealed its electric pickup truck, the F-150 Lightning, last year. It competes with Tesla’s long-delayed Cybertruck. Additionally, General Motors announced on Monday that it would launch a Chevrolet Blazer electric SUV in direct competition with Tesla’s Model Y.