Sun. Aug 14th, 2022

Tesla already reported vehicle shipment numbers for the second quarter, and now the full second quarter 2022 financial report (pdf) reveals it is related to inflation and the overall economic downturn, combined with a drop in the prices of Bitcoin and other cryptocurrencies . In the letter to investors, Tesla executives reveal that the company has sold 75 percent of its Bitcoin holdings, adding $936 million in cash to its balance sheet.

Last year, Tesla made a $1.5 billion investment in Bitcoin and announced it would accept Bitcoin as payment. Tesla started accepting Bitcoin in late March and abruptly returned in May, just 49 days later.

In the latest report, Tesla says the value of its remaining “digital assets” is $218 million, of which it had reported about $1.2 billion in previous quarters. Last July, Tesla CEO Elon Musk said, “I could pump, but I’m not dumping… I definitely don’t believe in getting the price high and selling or anything like that. I’d like to see Bitcoin succeed.”

During an investor call, Musk spoke about the crypto sell-off, saying it “shouldn’t be taken as a judgment on Bitcoin”. Instead, he said, Tesla sold its Bitcoin because it was “concerned about the company’s overall liquidity given the COVID shutdowns in China”. In short, Tesla needed the money. “We haven’t sold any of our Dogecoins,” said Musk, who later called cryptocurrency “an afterthought.”

When it comes to making electric cars — where new competitors seem to be announced every day — and solar products, the company reports it made $2.26 billion in profit this quarter, down about 31 percent from the previous quarter. quarter when it posted. profit of $3.3 billion. Earnings were made on revenue of $16.9 billion, which is also lower than in the first quarter, where the company reported bringing in $18.7 billion.

In terms of profitability, the company is still outperforming the second quarter of 2021, where it earned $1.1 billion on revenue of $11.9 billion. The company attributes that to several factors, including “lower inventory-based compensation costs,” increased vehicle deliveries compared to last year, and an improved average selling price. This is the first full quarter since Tesla raised the prices of all its cars by as much as 10 percent, and in June it raised prices for select models again. Despite the price increases, the company is breaking the trend of earning more per car every quarter. In the first quarter, the gross car margin amounted to 32.9 percent. This quarter it was 27.9 percent.

Tesla announced earlier this month that deliveries have slowed and are down about 18 percent compared to the first quarter. It also produced about 15 percent fewer cars this quarter than last year. In its earnings report, Tesla said it faced “limited production and shutdowns in Shanghai for most of the quarter,” but has continued to ramp up production at its new facilities in Berlin and Austin, Texas.

Other issues reported by the automaker include higher prices for everything from commodities to logistics, higher fixed costs per car due to the Shanghai shutdowns, and of course the aforementioned “Bitcoin depreciation.”

Compared to the previous quarter, the company’s revenue from the sale of regulated credits to other automakers declined nearly 50 percent. In the first quarter, it made $679 million from credits and in the second quarter, it made just $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 turbulent quarter at Tesla. In late April, CEO Elon Musk sold billions of dollars worth of shares in the company to help pay for Twitter (a deal that has been a huge mess and is now headed for Delaware’s Court of Chancery after Elon tried to cancel the deal). Musk also reportedly said he has a “super bad feeling” about the economy when he announced the hiring freeze at the company. Those layoffs have affected the autopilot team, and Tesla has been accused of violating labor laws after allegedly letting more than 500 Gigafactory employees go. Earlier this month, the company also lost its head of AI.

It hasn’t all been bad news, though. Tesla’s partnership with Uber and Hertz, where qualified rideshare drivers can rent the EVs to transport passengers around, appears to be progressing well based on a June report from Uber. It also looks like 2022 will be the year non-Tesla EVs gain access to the Supercharger network in the US, based on a fact sheet released by the White House.

The company held a phone call on Wednesday regarding its Q2 results, which you can listen to here.

Update July 20, 6:54 PM ET: Added Elon Musk’s comments on Bitcoin’s sell-off.

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