Following the release of its second-quarter car shipment data, Tesla has now released its complete Q2 2022 financial report (pdf), which indicates that it is coping with inflation, the general economic slump, as well as a decline in the price of Bitcoin and other cryptocurrencies. Tesla executives explain in a letter to investors that the firm has sold $75% of its Bitcoin holdings, bringing its cash on hand to $936 million.
Tesla declared it would take Bitcoin as payment last year and invested $1.5 billion in the cryptocurrency. Late in March, Tesla began taking Bitcoin; yet, just 49 days later, in May, it quickly changed its mind.
The value of Tesla’s remaining “digital assets,” which it had previously projected to be worth roughly $1.2 billion, is now $218 million, according to the company’s most recent report. Elon Musk, CEO of Tesla, declared in July of last year, “I might pump, but I don’t dump… I firmly reject the idea of raising the price before selling something or doing anything similar. I want Bitcoin to be successful.
Musk commented on the cryptocurrency selloff on an investor call, stating that it “should not be viewed as some judgement on Bitcoin.” The reason Tesla sold its Bitcoin, according to him, was that it was “concerned about overall liquidity of the firm given COVID shutdowns in China.” In essence, Tesla required the funds. Musk declared, “We have not sold any of our Dogecoin,” later referring to cryptocurrencies as “a sideshow to the spectacle.”
The corporation reports that it produced $2.26 billion in profit this quarter in its industry of producing solar items and electric automobiles, where new rivals appear to be revealed every day. This is a roughly 31 percent decline from the previous quarter’s $3.3 billion in profits. The corporation recorded $16.9 billion in sales for the quarter, which is lower than the $18.7 billion it reported for the first quarter.
The business is still doing better than it did in Q2 2021, when it made $1.1 billion on $11.9 billion in revenue, in terms of profitability. In addition to “reduced stock-based compensation expenditure,” “more vehicle deliveries compared to previous year,” and an increased average selling price, the business lists numerous other contributing reasons. It has been a whole quarter since Tesla increased the pricing of all of its vehicles by as much as 10%, and it did it again in June for some models. The corporation has deviated from its pattern of making more money per car each quarter despite the price rises. Its gross auto margin for the first quarter was 32.9 percent. It was 27.9 percent in this quarter.
Tesla said earlier this month that its deliveries had decreased by about 18% from Q1 levels. Additionally, it manufactured around 15% fewer automobiles this quarter than previous. While experiencing “restricted production and shutdowns in Shanghai for the bulk of the quarter,” Tesla claims in its financial report that it was nevertheless able to scale up production at its new plants in Berlin and Austin, Texas.
The carmaker also lists greater fixed costs per vehicle as a result of the Shanghai plant closures, increased pricing for everything from raw materials to logistics, and of course the aforementioned “Bitcoin impairment.”
The company’s income from selling regulatory credits to other manufacturers fell by nearly 50% from the previous quarter. It earned $679 million in Q1 from the credits, but just $344 million in Q2. The credits support other businesses who don’t produce enough “clean” cars to fulfill US and EU safety regulations.
It’s been a challenging quarter for Tesla’s culture. Elon Musk, the company’s CEO, sold shares worth billions of dollars in late April to help finance the purchase of Twitter. The transaction has been a complete fiasco, and it is now heading to Delaware’s Court of Chancery after Elon sought to end it. When announcing the hiring restrictions and layoffs at the firm, Musk allegedly said, “I have an extremely awful feeling about the economy.” The autopilot team was impacted by the layoffs, and Tesla has been charged with breaking labor laws for allegedly firing over 500 Gigafactory employees. Additionally, the business lost its AI director earlier this month.
However, not all of it has been negative. According to a report from Uber in June, the relationship between Tesla and Hertz, through which licensed rideshare drivers may hire the EVs to transport customers, appears to be succeeding. According to a fact sheet provided by the White House, 2022 will appear to be the year when non-Tesla EVs gain access to the Supercharger network in the US.