Tesla

Tesla’s Q2 Earnings Review: A Billion-Dollar Profit

Tesla provided investors with a much-needed quarterly blowout on Monday after reporting a near-tenfold increase in profits year-over-year.

Tesla’s had a lot of problems this year, from product recalls and Gigafactory construction mishaps to irking Chinese officials. 

One problem they haven’t had though is generating revenue. 

How did Tesla do in Q2? 

‘Good’ would be an understatement. Tesla blew it out of the park — even by its own lofty standards:

  • Vehicles delivered: 201,250 — up 8.7% year-over-year (YoY).
  • Earnings: $1.45 v.s. $0.98 per share expected.
  • Revenue: $11.96 billion v.s. $11.30 billion expected.
  • GAAP net income: $1.14 billion, up almost 1,000% YoY from $104 million in Q2 2020. 

This is also the first time that Tesla has ever surpassed $1 billion in profit, and it did it all without a heavy reliance on regulatory credits for a change. 

These credits, for those who don’t know, are given by the state and federal government for contributing zero pollution to the environment. Tesla has been selling surplus credits for years to other manufacturers, who can use these credits to comply with environmental laws.

Tesla’s overall automotive revenue came in at $10.21 billion, while credits represented just 3.5% of that at $354 million — lower than any of the previous four quarters. Meanwhile, automotive gross margins soared to 28.4%, its highest in four quarters.

This means that the company is finally moving away from overreliance on credits to generate profit. This has long been one of Tesla’s major bear cases, but this quarter’s results could mark the beginning of a new phase in Tesla’s growth — a phase where profit margins begin to rise exponentially.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here