Tesla has already released vehicle shipment numbers for the second quarter, and now its full Q2 2022 financial report (pdf) reveals that it is dealing with inflation and the overall economic slowdown, combined with a drop in price of bitcoin and other cryptocurrencies. In the letter to investors, Tesla executives reveal that the company sold 75% of its Bitcoin holdings, adding $936 million in cash to its balance sheet.
Last year, Tesla invested $1.5 billion in bitcoin and announced that it would accept bitcoin as payment. Tesla started accepting Bitcoin in late March, then reversed sharply in May, just 49 days later.
In the latest report, Tesla says the value of its remaining “digital assets” is $218 million, up from around $1.2 billion in previous quarters. Last July, Musk said, “I may be pumping, but I’m not throwing… I absolutely don’t believe in high price and selling or anything like that. I would like to see Bitcoin succeed.
Turning to its business making electric cars – where new competitors seem to be announced every day – and solar products, the company reports that it made a profit of $2.26 billion this quarter, down up about 31% from last quarter when it posted earnings of $3.3 billion. The profit was made on revenue of $16.9 billion, which is also down from the first quarter, when the company said it brought in $18.7 billion.
In terms of profitability, the company is still doing better than in the second quarter of 2021, where it made $1.1 billion on $11.9 billion in revenue. The company attributes this to several factors, including “lower stock-based compensation spending”, more vehicle deliveries compared to last year and an improved average selling price. This is the first full quarter since Tesla raised prices for all of its cars by up to 10%, and raised prices for some models again in June. Despite the price increases, the company has broken its trend of earning more per car each quarter. In the first quarter, its automotive gross margin was 32.9%. This quarter, it was 27.9%.
Tesla announced earlier this month that its deliveries had slowed, falling about 18% from the first quarter. It also produced around 15% fewer cars this quarter than last. In its earnings report, Tesla says it faced “limited production and shutdowns in Shanghai for most of the quarter” but continued to ramp up production at its new Berlin facility. and Austin, Texas.
Other difficulties reported by the automaker are rising prices in everything from raw materials to logistics, higher fixed costs per car due to shutdowns in Shanghai and, of course, the “degradation of bitcoin mentioned above.
Compared to last quarter, the company’s revenue from the sale of regulatory credits to other automakers fell nearly 50%. In the first quarter, it made $679 million from credits, and in the second quarter, it only made $344 million. The credits help other companies that do not manufacture enough “clean” vehicles to meet regulatory standards in the US and EU.
Culturally, it’s been a turbulent quarter at Tesla. In late April, CEO Elon Musk sold billions of dollars worth of company stock to help pay off Twitter (a deal that was a huge mess and is now heading to the Delaware Court of Chancery after Elon tried to cancel the arrangement). Musk also reportedly said he had a “super bad feeling” about the economy when he announced the hiring freeze and layoffs at the company. These layoffs affected the Autopilot team and Tesla was accused of violating labor laws after allegedly laying off more than 500 Gigafactory workers. The company also lost its head of AI earlier this month.
However, not all was bad news. Tesla’s partnership with Uber and Hertz, where trained rideshare drivers can rent the electric vehicles to transport passengers, appears to be going well, according to a report from Uber in June. It also appears that 2022 will be the year non-Tesla electric vehicles gain access to the Supercharger network in the United States, based on a fact sheet released by the White House.
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.