Tesla Q2 2024 Update [pdf]
digitalassets.tesla.com
digitalassets.tesla.com
They had a few decent misses on operating income and earnings per share.
And their operating margin is in the low 6%ish which would make it one of the worst performing auto manufacturers around at the moment.
Man things have turned quickly on Tesla.
They are still in a good cash position but their car business is really showing signs of strain at the moment.
they did announce that they'll release a more affordable model by the end of H125 so that will help, but with that timeframe its likely to be a model 3 refresh and not a new car.
> their car business is really showing signs of strain at the moment.
Their car business aka "their entire business"? :-)
Tesla acquired SolarCity which became their Tesla Energy division so it's not just cars, they also do residential solar, batteries, and supercharger infrastructure (which more and more manufacturers are using).
> all predicated on getting government money.
In an ideal world, what you're saying makes sense, but at least to give an example, for an Android phone, you have to persuade 500 million people to buy it. For SpaceX to get a multi billion dollar contract with the government you only have to persuade 10 people.
And what if another company (tesla) makes its own batteries.
Are they judged in a similar fashion?
What is Tesla's edge in energy infrastructure?
Tesla isn't a top-ten battery producer [1]. The batteries it does use (and make) are optimised for EVs.
[1] https://cleantechnica.com/2024/01/19/top-10-battery-producer...
Relative to a utility? Or any deep-pocketed investor who can buy Panasonic cells?
Tesla is a terrific EV company. They shouldn’t be pivoting away from their roots but reclaiming them.
Megapack is a product they've been perfecting for many years and it's already at least a v3 product.
Not only they are not using Panasonic cells in Megapack (those go exclusively to their higher-end cars), if you think all it takes to create a competing product is to have money to buy battery cells then you exemplify "a little knowledge is a dangerous thing".
Megapack is a product with lots of sophisticated electronics that takes serious engineering to develop, it's at least v3 product with years of improvements. You need high-powered voltage conversion, battery management hardware and software so that it doesn't explode etc.
Tesla is a clear leader in the field: every major energy project announced, from Australia to California, uses Tesla megapack. I don't hear much about any of the competition.
Tesla is leading in scale and expanding rapidly (just finished ramping up first U.S. factory and building another factory in China).
Even for Tesla to build another 40 GWh factory which is mostly copy & paste of their existing megapack factor, it's a year long process.
If you start with battery cells, you're looking into a multi-year design & testing & initial production for the first megapack-like product and then at least another year to scale your first factory to 40 GWh yearly production.
By which time Tesla will have few more factories and v5 of Megapack.
I was nodding along to most of your comment but this part is a clear exaggeration. Many of the California BESS projects are using LG systems. For example Morro Bay, Edwards Sanborn, and Moss Landing, which are among the largest on the planet, all used LG, at least for some phases.
Megapack (a giant battery pack for grid energy storage) has much more in it than just battery cells.
Tesla's Megapack sales are growing rapidly, they just ramped one U.S. factory from 10 GWh to 40 GWh and are building another 40 GWh factory in China.
Every few weeks there's another big project announced that will use Megapacks.
As far as I know Tesla is a decisive leader in that field but hard to tell because while there is competition, they don't disclose the sales.
[1] https://carboncredits.com/bp-grabs-the-opportunity-to-take-o...
Either way, looked it up out of curiosity: Audi's parent company, Volkswagen, currently has a market cap of ~58B EUR with revenue over 300B EUR in 2023. Tesla has a market cap of $772B with revenue just under $100B in 2023.
Tesla's stock is trading (and has) at a staggering multiple for the automotive industry. It's fair to call out that their competitors may have their own struggles, but negative growth in Tesla's primary product line is going to make it increasingly tough for investors to stomach that premium.
Elon has a gift for selling a vision, so I certainly wouldn't bet against Tesla on any short-term horizon, but I struggle to imagine that alone will be able to carry their stock price in perpetuity.
Totally logical for the CEO of the company to be vocal supporter of the man who wants to kill those credits.
That is not a luxury CEOs get. They do not have a free hand to run companies, they are hired by boards of directors who represent the shareholders. His job is to work for the benefit of shareholders, and if he can't do that then it's simply a case of firing him.
I cancelled my Cybertruck res, and after buying four Teslas, I will not spend another dime on one until Elon is gone. Tesla is, hopefully, forced into self preservation by market fundamentals.
I was under the impression that the fiduciary duty was to the company/corporation. At least that's the case in Canada (2008 SCC 69):
* https://www.fasken.com/en/knowledge/doing-business-in-canada...
(Further, legally speaking, the shareholders are not legally the owners of a company, just another type of stakeholder.)
While institutional shareholders generally mean your boss is an excel sheet seeking profit, the only "duty" to shareholders is still "do not defraud them". They can, of course, seek to change the board though...
I mean, can Musk argue that he legitimately believes battling the woke mind virus is for the benefit of Tesla shareholders and their returns on investment and thus fulfilling his fiduciary duty?
Breach of fiduciary duty however would be if CEO intentionally defrauded then of their value (essentially, through intentional bad care for the company)
* https://en.wikipedia.org/wiki/Burwell_v._Hobby_Lobby_Stores,....
I think your expectations of loyalty might be a bit exaggerated. A job is a job. Whether as a CEO or as a warehouse picker, it's not one's life.
But no, _employees_ of a company do not have the same fiduciary duties towards a company that its officers do.
I mean, nothing stops you from making it into job requirements in your company, but, apparently, this is not a requirement at Tesla...
What, nothing stops you making director-style fiduciary responsibility a job requirement for normal employees in your company? I'd, er, check with a lawyer before you try that one.
I'm not sure that's always or even often true, despite the 'O' in the name. You're generally mostly talking about the CEO plus directors.
It is one of those terms were if you were to actually find people that are truly 'woke' and respresent everything it stands for, it would be a very difficult task indeed. It is like taking the 'No true Scottsman' fallacy and tipping it on its head.
So he can’t be inconsistent.
I’m not saying what he (or anyone else) says today is consistent with anything else he says or has said. Just that that one statement is _internally_ consistent.
"When Elon Musk came to the White House asking me for help on all his many
subsidized projects, whether its electric cars that don't drive long enough,
driverless cars that crash, or rocket ships to nowhere, without which
subsidies he'd be worthless, and telling me how he was a big Trump fan and
Republican, I could have said, 'drop to your knees and beg,' and he would
have done it..."
-Trump, who Elon is currently giving $45 million / month for his campaign.
To most people, those two things are completely separate despite actually being two sides of the same coin.
https://truthsocial.com/@realDonaldTrump/posts/1086367432957...
I know it makes Musk an easy target and easier to attack when a report comes out saying he's donating $45m to Trump but seriously people need to stop believing blindly what the media says about anyone (and Musk especially) without fact-checking first. When I first saw the article about it in WSJ I was skeptical. There were 0 sources and it was sus.
"Oh WSJ said it so it must be true!"
WSJ's source: "according to people familiar with the matter." [2]
[1] https://time.com/6999003/elon-musk-donate-millions-trump-cam...
[2] https://www.wsj.com/politics/elections/elon-musk-has-said-he...
Yes the PAC may support Trump but I don't think he's pumping 45 mil a month into it. WSJ put that article about it without any sources and Musk denied it.
It would be immoral for Trump to offer a quid pro quo to Musk, so that couldn't be the what's happening at the moment
That it would largely be about Musk winning, rather than doing all that he can to support global EV adoption, would absolutely track for him.
Service and Energy Generation are <10% LOBs. They are a car business.
Of course if Tesla didn't make those car and batteries they wouldn't have regulatory credits to sell. Also the credits were 3.5% of total revenue ($890M of $25,500M).
I'll explain for you what my comment means. Operating income is a measure we use to see how profitable a company is at its core business after you subtract the costs of running that business.
Yes the credits are a small portion of Tesla's income but after account for the costs of building cars what's' left is the operating income. Those credits are about half o that income, without them the operating income( a measure of if the core business works) would be cut in half.
That is a significant measure.
It's very clear on the diagram I linked above. You can't attribute 100% of 'operating income' to one thing. If anything you need to attribute things proportional to their inputs. Otherwise it's misleading.
I mean if that's what you want, here you go - https://imgur.com/a/dWrGKuN
Then you create a strawman scenario of 'without tax credits...'. Well no, without tax credits the spending policies and prices of other revenue streams change in order to hit net income targets.
Really they aren't doing poorly when you consider the awful interest rates out there.
Until you've lived at a time when 13% was considered a great mortgage rate, you have no idea what an "awful" interest rate is.
I took my Y to the Bay Area this last week and with the crappy roads, it was a rough, rough ride.
That being said, like others have said.. I won't spend money on another Tesla while Elon's there, even if they ship magic on a stick.
Hasn't this always been the case? Haven't they always been dependent on credits and subsidies to make a profit?
Tesla's received almost $3 billion in state and federal subsidies and half a billion in bailouts[0] (and has more violations[1] than most other companies of its size). Additionally, they regularly engage in probably illegal accounting practices like categorizing automobile warranty expenses as part of the "Goodwill" category rather than the cost of making the vehicle leading to a huge inflation of Tesla's claimed gross margin
[0] https://subsidytracker.goodjobsfirst.org/?parent=tesla-inc
[1] https://violationtracker.goodjobsfirst.org/parent/tesla-inc
All the future projects are basically smoke and mirrors.
Robotaxi ?
"Though timing of Robotaxi deployment depends on technological advancement and regulatory approval, we are working vigorously on this opportunity given the outsized potential value. "
Sure thing. So how come that Tesla is the only one company trying to solve autonomous driving that didn't even ask for any regulatory approval yet ?
As a reminder, Musk said in 2017 that his Boring Company was doing DC to NY route (in 29 minutes) and got 'verbal govt approval' and was only waiting for full approval to proceed. We're exactly 7 years later and absolutely nothing has been done.
Tesla is an AI company now. Funny chart on page 8 - Tesla AI capacity stands at '45k H100 equivalent', while the company claims it's betting it's whole future on solving autonomous driving. But xAI, which is also a Musk's company, apparently build a 100k cluster from scratch in no time (apparently using Tesla's H100...). Something doesn't add up here at all.
I'm truly fascinated by all of this.
So were electric vehicles when he took over as CEO. In fact, that's why he ended up taking over as CEO — Tesla needed someone who could sell smoke and mirrors for long enough to do a "fake it 'til you make it" run with the entire brand, as they needed to have the cars to justify the chargers and the chargers to justify the cars.
This doesn't mean he's still the right man for the job once the dull nature of reality becomes more obvious, when EVs become boring and mundane, which is exactly what's happening in that market.
Rockets that land themselves were talked about since the 60s and prototyped by Lockheed in the 90s as the DC-X. (Search YouTube for some flight tests.) The funding just wasn’t there after the Cold War was over and excitement about space was at a low point.
I’m not taking away from the great accomplishments of the engineers at Tesla and SpaceX. What I’m pointing out is that in both cases Musk was raising money to complete and bring to market things that were already quite proven to be achievable. EVs and vertical landing rockets had been done, just not as well.
Rapid tunneling, FSD, and Neurolink are all things nobody has done or done well. Success rate is much worse in that domain because there is a lot less prior art to draw from and less certainty about a solution.
I think SpaceX is meaningfully different than Tesla; even now, Musk seems to display a substantially different personality with regard to SpaceX vs. everything else — the similarity is the optimism, sure, but in he's a lot more willing to say "this is hard and I will make mistakes".
As for how hard the SpaceX stuff is: all I can do there is look at all the rocket companies and space agencies that were openly laughing at what SpaceX was proposing to do. I think SpaceX is where the market proof is for that, rather than the other way around.
Based on what I've heard from civil engineers and neuroscientists, with regard to TBC and Neuralink they regard him much as the annoying speaker with no self-awareness in https://xkcd.com/793/
FSD sounds like what happens with time estimation for someone new to software engineering projects — you have to take what they say, double the number, and increase to the next highest unit: "1 day" means "2 weeks"; "3 months" means "6 years"; and if someone says "next year" in 2016, pencil 2036 into your diary.
Anyone laughing at what SpaceX was doing was ignorant of things like the DC-X. I suspect a fair amount of that laughter was actually fear from a moribund industry happy with the status quo rather than actual skepticism that it could be done.
Some skepticism about a company the size and budget of SpaceX being able to do it might have been reasonable. That is probably the most impressive thing. The DC-X was Lockheed.
What Tesla needed was someone who is un-naturally good operator: someone who can drive the costs down, motivate the employees to deliver great product at a profit.
That was Musk.
And if you think that's just a given and any CEO can do it: currently Lucid and Rivian are still loosing tons of money on their cars. So does Ford and GM. Not to mention Fisker and few others who went bankrupt in the process.
You can do apples-to-apples comparison of execution of Musk vs. CEO of Lucid or Rivian by looking at "money burn at year N" of company's existence. Lucid and Rivian are still accumulating "money burn".
Interesting, I had not heard about that aspect.
That ability to see and remove unnecessary costs matches what Musk managed with SpaceX, so I can believe he also has that skillset; but more recently with Tesla (and continuously with Twitter) it's felt like he saw the costs and rejected the idea that any of those things might have value.
This would still make him the wrong person going forward, but for different reasons.
One way in which I think he would continue to bring value to Tesla, is that he can be an excellent showman (which goes with selling smoke and mirrors until the reality catches up), and this makes Tesla models far more iconic than many other more forgettable modern cars. For example, although everything about the Cybertruck screams "unsafe" to me, it also looks cool and nobody's going to confuse it for a different brand of truck.
Regulatory credits were 0.9B out of 1.5B of profits.
If that's what you want, here you go - https://imgur.com/a/dWrGKuN
You could argument that if the credits are not there, Tesla will sell less cars, and the net profit will be even more slim.
Also I am so certain the humanoid robot is not very productive and someone in management pushed hard to get it on the line and photographed just before the Q2 report deadline, what a joke.
Edit: Not to suggest that their narrative is correct but that's the general aim of these calls. See Snowflake below.
https://s26.q4cdn.com/463892824/files/doc_financials/2024/q4...
A $700 billion market cap 'meme stock'. Don't think so.
- Investopedia
I do not hold Tesla stock (directly, don't have a desire to audit my mutual funds that closely).
Developing general control systems for 6+ axis arms and picking the correct number and size of arms for whatever strength/speed you need seems far more useful. Yeah, you can pick up your one-size-fits-all gimpbot and put him in the cage to put different cells into different boxes, but the hard part IMHO is the control software/training, not the hardware.
The quarterly statement is called a 10Q and is filed with the SEC and can easily be found on the company investor relations website.
It is totally normal to have a slide deck published to accompany the quarterly shareholder call.
It's amusing to see what Tesla puts in a filing in which material mis-statements are felonies. It's quite different from what Musk says when he can get away with it.
The phrase "full self driving" is never written out. They do use "FSD (Supervised)" twice, both with the footnote in tiny type "Active driver supervision required; does not make the vehicle autonomous." The closest thing to a mention of real autonomous driving is "Looking ahead to future autonomous driving and robotaxi service, we continued progress on software and hardware development." Remember that Tesla announced the reveal of their robo-taxi for August 8, 2024, but that's been cancelled.[1]
On the battery front, Tesla is having a bad year.[2] Tesla is trying to make their own cells, rather than buying them from Panasonic or CATL. It's not working well at all. Also, note the total absence of any mention of solid-state batteries. That's clearly the coming technology, and Tesla is nowhere in that space. (Yes, solid state batteries are real. On sale at Home Depot now.[3])
This is a big car company having a so-so year. Ford and GM have years like this. Ford's P/E ratio is around 15. GM's is around 6. Tesla's is around 68. Nothing in this report justifies that.
[1] https://www.bloomberg.com/news/articles/2024-07-11/tesla-pla...
[2] https://electrek.co/2024/07/17/elon-musk-might-give-up-tesla...
[3] https://www.homedepot.com/p/YOSHINO-Solid-State-Portable-Pow...
Telsa is not a car company, any anyone that thinks that way is completely missing the point
Tesla is over 20 years old. This is not a startup company any more.
Energy storage, Optimus and self-driving cars are predicted to generate much, much more.
Of course, I'm not saying it's a certainty, but it's clearly the goal. Elon bets everything on his visions, so it's either going to come true or Tesla will fail. Either way, Tesla won't be a "car company" much longer.
They are only mentionned is some very broad way, without any specifics - mostly on Twitter, through Musk or other non legally binding communications.
I will give you a hint. The chances of going to prison for lying to investors are very low. The chances of going to prison for lying in regulatory fillings are very different.
I don't understand the legalities around regulatory filings, or why a company would be required to file details about their future plans and goals. If they're planning to make a ton of money from some future product, what regulatory filings are they required to make about that?
In the last two investor calls Elon has said repeatedly he expects Optimus and self-driving to value tesla at well over $5B.
Again, I'm not saying for one second I think it will come true, just that Elon is being extremely clear that is the plan. I firmly believe it will either come true or Tesla will fail.
Seriously ? Tesla is a publicly traded company. It's mandatory to disclose all the financials, what business it's in etc, to give investors an accurate view of what future revenues and profits could be.
And Tesla is doing that - and in those papers they are pretty much saying, we are 100% a car making company.
Here you have the latest Annual Report and proxy statements:
https://www.sec.gov/Archives/edgar/data/1318605/000162828024...
https://www.sec.gov/Archives/edgar/data/1318605/000110465924...
Optimus is mentioned once, pretty much as a side note. Dojo is not mentionned at all. How come ?
Of course not.
Apple are clearly planning many, many years of product strategy including things that may or may not come true and that may or may not make billions of dollars. Some companies play their cards close to their chest and keep everything a secret from everyone (Apple) and some don't (Tesla).
Neither strategy requires them to file with the government about their future plans.
> in those papers they are pretty much saying, we are 100% a car making company.
Yeah, right now that is what they're making money from, and that is what they are filing. In the future they plan to make gobs more money from other things which they are currently working towards. How much money and effort do you think Apple are currently putting into products that could generate as much profit as the iPhone? Are they filing about those?
Yes. See Apple's 2023 annual report, page 23.[1]
"Apple Vision Pro™, the Company’s first spatial computer featuring its new visionOS™, expected to be available in early calendar year 2024"
SEC filings include "forward looking statements".
[1] https://www.annualreports.com/HostedData/AnnualReports/PDF/N...
Just like you, I'm not saying this will happen. But I do think it most closely matches the Tesla playbook of the previous decade.
Selling equipment to utilities is profitable, but not hugely so.
From what I can see that site is 900 MWh [1]
Tesla just struck a deal with Intersect Power for 15.3 GWh of Megapacks [2]
[1] https://www.energytech.com/energy-storage/article/21183723/f...
[2] https://www.teslaoracle.com/2024/07/20/tesla-tsla-wins-multi...
This is a commodity business; it doesn't seem plausible that anyone could maintain high profit margins in it.
> Optimus
Vapourware of unclear purpose.
> self-driving cars
Yeah, I'll believe that when I see it.
> are predicted to
By whom?
Since learning more about Mr. Musk, registrations for his automobiles in California have fallen drastically: https://www.reuters.com/business/autos-transportation/teslas...
- A lot of Tesla competitors have caught up (outside of self driving) and energized their sections of the EV market. I see way more Korean EVs on the road than ever before for example.
- EV growth is slowing due to various factors, but so are cars in general due to economic issues.
- Elon opened up the NACS as a gambit for not having to change their own chargers. NACS won, but a lot of prospective EV buyers are waiting for NACS native vehicles from other manufacturers.
- Elon has really alienated massive chunks of the EV demographic. Identity politics are inherently tumultuous.
As a launch batch Model Y owner myself, I’m definitely looking elsewhere whenever this car needs replacing. I want more comfort and just a better driving experience (turn signal stalks, an instrument cluster etc in the more accessible models) and the only reason I went with Tesla is the charging network is unmatched in NA.
I do not have a very rosy outlook on Tesla as long as Elon remains in charge. He got it where it is, but he’s increasingly a liability.
Mercedes already have certified level 3 self driving. (With some caveats, but that’s more than any of Tesla offerings)
Pretty bleak YoY numbers for car sales. They are pretty open about pivoting away from cars at least.
> Preparation of Semi factory continues and is on track to begin production by end of 2025.
Okay. That's why you've delivered 36 of the 100 units that were scheduled for seven years ago (2017), and none since then, which is why PepsiCo, Sysco, UPS and Walmart have all since terminated their agreements.
But it's "on track". Sure.
Last time Musk tried to throw out an excuse for this, it wasn't production capacity, it was "battery availability". Meanwhile:
> In Q2, we produced over 50% more 4680 cells than in Q1 and continued to see cost improvements.
> Both Megapack and Powerwall achieved record deployment in Q2, resulting in 9.4 GWh of total storage deployments. Overall, the Energy business achieved record revenues and gross profit in Q2.
"We're breaking so many records in battery availability and production capacity, you guys! We just haven't been able to make any for the Semi in seven years."
1. Semi is not dependent on 4680 batteries. And that's still a minority of the battery mix they use. 4680 form factor is still limited to Cybertruck and some Model Y production.
2. Semi has been in initial and testing production, only selling to customers close to the factories and engineers so they could service them quickly, learn and adapt new models.
3. More new Semi trucks have been recently delivered to Pepsi and internally to Tesla.
4. "On track" compared to previous released information from last few quarters.
Semi is still a small part of the business and not as prioritised as it takes a lot to develop a new program for big trucks when the company hasn't been in that niche before. At the same time they are developing various charging solutions with customers and on their routes before they rollout. Still learning from customers and drivers what is the best utilisation for these products.
Keep in mind that "low volume" product is already the best selling EV pickup in the US...
https://qz.com/tesla-cybertruck-ford-f150-lightning-electric...
This is a truck, that is 7 years after unveil and they still did not communicate the most important metrics for a truck, about it's weight and hauling capacity.
But they obviously have SOME capacity to make Semi batteries. But just... haven't?
> only selling to customers close to the factories and engineers so they could service them quickly, learn and adapt new models.
Weird that Musk said they had battery capacity issues, then, not this?
> More new Semi trucks have been recently delivered to Pepsi
Pepsi has said they've moved on. Tesla might have done so as a goodwill measure, who knows.
https://www.pepsico.com/our-stories/press-release/pepsico-be...
> PepsiCo made initial payments for 100 Tesla Semis in 2017
> But according to the food-and-drinks maker and one of its executives with knowledge of the deal, PepsiCo was using only 36[1] of Teslas promised 100 electric trucks as of [April 2024].
So they're getting 14 more "in the next several months", it seems. And still are owed 50 more from a seven year old order? They're more patient than I, it seems.
https://www.reuters.com/business/autos-transportation/tesla-...
[1] This source (https://www.ccjdigital.com/alternative-power/article/1563524...) says there's only 21.
Do you have a source for this? I googled it and saw nothing about this.
Tesla seems to be doing better than the rest.
If you remove Tesla, EVs are continuing their climb. 60% increase YoY in 2023.
https://www.coxautoinc.com/market-insights/q1-2024-ev-sales/ says "EV share of total new-vehicle sales in Q1 was 7.3%, a decrease from Q4 2023." Though looking at the raw statistics[1], that's still a 2.6% YoY increase so hard to say if the downturn is merely seasonal or part of a larger trend. I couldn't find any data at all about Q2 2024, which is what the Tesla report we're discussing is for.
[1]: https://www.coxautoinc.com/wp-content/uploads/2024/04/Q1-202...
Being a celebrity is hard, and frankly Musk messed up by turning himself into one. That can only be explained by ego or lack of foresight.
GP said this needs to be "part of the narrative," and they're absolutely, unequivocally right. People hate him and don't want to be affiliated with him, justified or not.
https://www.cnbc.com/2024/04/01/would-be-tesla-buyers-snub-c...
You also have people like John Carmack saying, "I have made multiple two hour drives without touching the wheel." His main complaint is that the car makes him touch the steering wheel if he's wearing sunglasses (because it can't track his eyes to determine whether he's paying attention).
I don't think owners will rent out their cars as taxis any time soon, but the technology really does seem to be there.
1. https://twitter.com/ID_AA_Carmack/status/1814687334366912530
Even 99.999% reliable miles is still dangerous at 3.2 trillion miles per year
When did you have the free trial and where was this experience?
And it tried to kill me on the freeway when it pretended it was going to merge and then just kept driving straight into the gutter.
In fact I have been thinking about asking for a refund because it is LESS capable than our 2020 Corolla’s adaptive cruise.
Really crappy situation to be waiting for someone to fix software that you paid for. If EAP is actually OK overseas, why don’t we have it here??
What's the issue with people buying the stocks they like?
(as long as it's not $GME of course, we wouldn't want to push hedge funds to illegally manipulate the market to stay afloat :P)
(Firefox for Windows if that matters)