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| Tesla's Q2 Financial Results Reveal Impact of Lower Sales Prices Amid Promising Battery and Solar Gains Image credit: TheStreet |
Tesla released its second-quarter financial results, shedding light on the effects of reduced sales prices and production cuts. Earlier, Tesla disclosed a 14.4 percent year-over-year decline in production and a 4.8 percent drop in sales for Q2 2024. The financial results reflect these changes.
Automotive revenues fell by 7 percent year-over-year to $19.9 billion, partly due to price cuts. However, Tesla saw a significant boost in its batteries and solar segment, with battery deployments reaching 9.4 GWh, generating $3 billion in revenue.
A notable increase in regulatory credits also contributed positively to Tesla's finances. These credits, which other automakers purchase to offset their emissions, tripled compared to 2023, bringing in $890 million for Q2 2024.
Overall, Tesla's revenues grew by 2 percent year-over-year to $25.5 billion, with a gross profit of $4.5 billion, a 1 percent increase. However, net profits dropped by 45 percent to $1.5 billion, and the operating margin decreased by 33 percent to 6.3 percent. Operating expenses rose by 39 percent to $3 billion, and capital expenditures increased by 10 percent year-over-year.
Despite these challenges, Tesla's net cash and free cash flow improved compared to the previous quarter and year-over-year. CEO Elon Musk's claims about Tesla's focus on AI saw little elaboration in the financial report, except for an expectation of increased profits from AI, software, and fleet-based operations in the future.
Tesla plans to start production on new, more affordable models in the first half of next year, combining features of current vehicles with a new platform under development.
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