Tesla's net profit jumps 10-fold, gross margin 28.4%, Musk says second half performance will be stronger

Old Musk said I won't participate in earnings calls in the future if there's nothing important.

Wen/Song Shuanghui

In the early morning hours of July 27, Tesla released its second-quarter earnings report, which was summed up in one sentence, "Good, very good, very good."

This was Tesla's eighth consecutive quarter of earnings growth, and the longest streak in the company's history. Net income reached $1.12 billion in the second quarter, surpassing $1 billion for the first time and a 10-fold increase from a year earlier.

Sales in the second quarter also reached a best-ever $11.96 billion, nearly double the amount in the same period last year and above analysts' previous estimates of $11.4 billion.

More importantly, the gold in Tesla's earnings report improved significantly this quarter, moving away from its past model of relying on selling points for profit, and not making money from speculating on Bitcoin (in fact, the speculation cost Tesla $23 million in the second quarter, though less than the $75 million analysts had predicted).

Of the $1.12 billion in net profit in the second quarter, only $350 million was earned from selling points, with the rest earned mostly from selling cars.

The other big highlight came from profit margins, with Tesla's overall gross margin hitting 24.1 percent in the second quarter, its best level since 2018, with costs under very good control. The whole car gross profit margin is even more amazing, as high as 28.4%, the traditional car companies to see tears.

This performance let Musk also Versailles a time, he said in the conference call after the release of the earnings report, there is nothing important ah, the quarterly earnings meeting I will not participate in, just participate in the general meeting of shareholders on the line.

Of course, the challenges aren't non-existent, with Tesla acknowledging that challenges from its supply chain, particularly a global semiconductor shortage and trouble from port congestion, affected its second-quarter performance. And with global demand for cars at record levels, parts availability will have a major impact on delivery growth in the second half of the year.

Despite several delays in the construction of its Berlin factory, Tesla is confident that it will build the first Berlin-built Model Ys within the year, and Tesla has hinted at stronger sales in the second half of the year, as long as there is an adequate supply of key components.

On the issue of mass production of 4680 batteries, which has been a concern to the outside world, Musk simply brushed it off, saying, "It's hard to say when that last technical challenge will be solved." But this statement still reveals that Tesla's mass production delivery of this new battery has encountered technical bottlenecks and is under pressure.

Interestingly, Musk still didn't hold back his venom when it came to supply chain issues, trolling Apple again. He said there has been a misconception in the market that Tesla uses a lot of cobalt.

"I think Apple uses close to 100 percent cobalt in its batteries, phones and laptops, whereas Tesla doesn't have any cobalt in its lithium iron phosphate batteries, and uses almost no cobalt in its nickel-based chemistry."

Back when people asked when Tesla would open up its supercharger network to competing cars, he brought up Apple again, saying that Tesla's goal is to support the dawn of the sustainable energy era, not to build a walled garden with which to intimidate competitors, a tactic that some companies are already using, like Apple.

As for when other EV owners will be able to use the Tesla Supercharger, Musk said it will be OK later this year, when owners of other brands will be able to download the Tesla App and use a converter head to charge their cars at the Tesla Supercharger, with billing rates yet to be determined.

Overall, although Tesla experienced a lot of ups and downs in the second quarter, especially in the Chinese market, the final results show that those small storms are just floating clouds.