Tesla beat revenue expectations in the second quarter, although profits were below expectations. Revenue growth came mainly from the energy division, with $3 billion in revenues. Tesla recorded less revenue from car sales, selling fewer vehicles in a slowing market.
Impressive performance despite challenges
Despite a difficult start to the year for the electric vehicle (EV) industry, Tesla once again exceeded expectations for its second-quarter results. The initial Wall Street consensus had forecast revenues of $24.380 billion and earnings of $0.61 per share. Tesla exceeded these forecasts significantly in terms of revenues, but not in terms of profits. Second-quarter sales reached $25.5 billion, a solid billion more than originally forecast. However, earnings were below expectations, at $0.52 per share (non-GAAP).
Energy division leads revenues
Although Tesla cars are still selling relatively well, the company is seeing a slowdown in vehicle sales due to a generally sluggish automotive market. This is mainly due to high interest rates and a high cost of living, which are causing consumers to curb their purchases of new vehicles.
Most of Tesla’s revenue growth comes from its particularly lucrative energy division. Sales of batteries to power homes and redistribute energy back into the grid generated $3 billion in revenues for this division alone last quarter. Tesla recently reported a quarterly record of 9.4 GWh of energy storage deployments, resulting in record revenues and gross profits for this segment.
Significant regulatory credits
In addition to energy sales, regulatory credits were a big part of Tesla’s second-quarter results. Thanks to its ability to sell credits to other automakers who need them to comply with emissions regulations, Tesla sold $890 million worth of credits in the second quarter. To put this in perspective, the company sold $282 million worth of credits last year.
Fewer cars sold, but revenues up
Despite these successes, Tesla is selling fewer cars and, more importantly, recording less revenue from car sales alone. Tesla’s revenue from car sales is down 45% on last year’s results. In 2023, the company earned $2.7 billion from car sales, while this year that figure has fallen to $1.5 billion. This drop is attributed to a generally gloomy market, but also to Tesla’s aging range and lack of truly affordable models.
New products on the horizon
Despite these challenges, Elon Musk has promised the arrival of three new models this year, including the updated Tesla Model Y, the much-anticipated Tesla Roadster and an affordable model that should also serve as a Robotaxi. These launches could once again surprise the market in the coming months and potentially revitalize Tesla’s car sales.
In conclusion, although Tesla faced challenges in the car sales sector, its energy division and regulatory credits helped to exceed revenue expectations. With new models on the horizon, Tesla could once again spring a surprise on the electric vehicle market.
