Tesla nears its earnings day with the stock firmly in the black for the year but facing concerns about its robotaxi aspirations, EV demand, and Chief Executive Elon Musk’s deeper wading into politics and divisiveness.
Tesla is scheduled to report second-quarter earnings on Tuesday (July 23) after the bell, with a call with analysts to follow at 5:30 p.m. Eastern. The call will be webcast.
This electric car maker is expected to post quarterly earnings of $0.602 per share in its upcoming report, which represents a year-over-year change of -33.9%. Revenues are expected to be $24.574 billion, down 1.4% from the year-ago quarter, according to Bloomberg's unanimous expectations.
Tesla’s Q2 Delivery Numbers
Tesla delivered 443,956 electric vehicles in Q2, beating the 439,302 projected by analysts, but nearly 5% below the 466,140 deliveries in the same period last year. However, the numbers were well ahead of the first quarter’s 386,810, and this boosted Tesla shares.
The delivery numbers are the closest proxy for sales disclosed by Tesla. These deliveries are categorized as “Model 3/Y vehicles” and “other vehicles.” However, Tesla does not break down specific numbers for individual models or deliveries by region.
Automotive revenue
Tesla reports revenues under two segments–automotive, and energy generation and storage revenues. Automotive sales and services constitute a major chunk of its revenues. The company generated $6.0 billion in revenue last year from energy generation and storage, compared with $90.7 billion in revenue from automotive, services and related businesses.
Tesla’s automotive revenue fell 13% year over year to $17.4 billion in the first quarter of 2024, following a 9% drop in deliveries and a decline in average selling prices. This also contributed to a 9% decline in total revenues to $21.3 billion.
Tesla also cited seasonality, macroeconomic headwinds, factory shutdowns in Germany and supply disruptions due to Red Sea conflicts, but said, “the second quarter will be a lot better.” With deliveries improving in the second quarter sequentially, revenue is likely to improve from the first quarter, but down year over year.
Margin erosion
Tesla’s price cuts in response to falling sales of electric vehicles amid an industry-wide slowdown, have eroded its margins. Operating margin in the first quarter of 2024 more than halved to 5.5% from 11.4% in the same period last year. This would be a key metric to watch in the second quarter.
New Growth Driver: Energy generation and storage margins
Strong and growing energy demand amid the AI boom bodes well for Tesla's energy business, which accounted for 7% of revenue in the first quarter. The business reported a record profit margin of 24.6% with energy storage deployments, the Megapack in particular, reaching an all-time high in the first quarter.
Megapack is Tesla’s energy storage solution for commercial, industrial, utility and energy generation customers. In the second quarter, Tesla’s storage deployments rose to a record 9.4 GWh (gigawatt hour), more than 2x from the previous quarter. With more than 20% gross margin in the past three quarters, this highly profitable business is poised to be Tesla's future growth engine. Energy storage deployments and gross margins will be key metrics to watch for this business in the second quarter.
Business Spotlight: Robotaxi event delay
Bloomberg reported recently that Tesla's robotaxi event had been delayed to October from Aug. 8 so more prototypes could be produced. Musk said the delay was due to a design change he had requested, and said the extra time could allow Tesla to showcase "a few other things" at the event.
Delaying the August self-driving day was undoubtedly “disappointing,” but since it was only postponed, once it happens later in the year it is still likely to be a boost for the stock, Cantor Fitzgerald analyst Andres Sheppard said in an interview.
Besides, new versions of Tesla's self-driving platforms along with a lower-cost model might also deserve investor attention. In the company's latest earnings call in April, Musk said Tesla planned to start production on "more affordable" models late this year or in early 2025.
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