• Thu. Jun 13th, 2024

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"Tesla's profits surge, defying price cuts.""Tesla's profits surge, defying price cuts."

“Tesla’s profits surge, defying price cuts.”

Tesla’s Profits Surpass Expectations Despite Price Cuts.

Tesla, the electric vehicle giant, surprised the market with a significantly larger increase in profits than anticipated, even amidst a series of price cuts that reduced the revenue per vehicle sold.

In the second quarter of the year, Tesla reported adjusted earnings of $3.1 billion, equivalent to 91 cents per share, marking a remarkable 20% growth compared to the same period the previous year. Analysts surveyed by Refinitiv had forecasted earnings of 82 cents per share, making Tesla’s performance even more impressive.

 

"Tesla's profits surge, defying price cuts."
“Tesla’s profits surge, defying price cuts.”

Although the profit margin of 18.2% exceeded expectations, it was still lower than the previous year due to the multiple price cuts implemented earlier in the year. A year ago, Tesla boasted a 25% profit margin, and even in the first quarter, amid initial price reductions, it achieved a 19.3% profit margin. However, it was projected that continued price cuts would bring the profit margin below 17% in the most recent quarter.

Excluding revenue from the sale of regulatory credits, Tesla’s automotive revenue saw a notable 47% increase. However, this growth was substantially lower than the remarkable 83% surge in the number of vehicles sold, signaling that Tesla’s strategy of lowering prices has successfully driven greater demand for its cars.

The price cuts came as Tesla faced mounting competition in the electric vehicle market from established automakers. Additionally, rising interest rates contributed to higher overall car purchase costs for most consumers, leading to economic uncertainty.

In a statement, Tesla expressed contentment with its healthy operating margin, even in the face of price reductions during the first and second quarters. The company attributed this achievement to ongoing cost-cutting efforts, the continued expansion of production capabilities at its German and Texas factories, established last year, and strong performance in its other ventures, including energy and services.

Despite the challenges posed by uncertain times, Tesla’s earnings statement exuded confidence in the company’s long-term prospects, emphasizing that the right ingredients were in place for success.

The company has ambitious plans to sell 1.8 million vehicles this year, representing a significant 37% increase from the total sales in 2022.

However, Tesla acknowledged that its production for the third quarter would experience a decline due to planned summer shutdowns of assembly lines. The temporary pause in production was necessary to facilitate essential upgrades at its factories.

In an investor call, CEO Elon Musk disclosed that the company is engaged in “early” discussions with another major automaker to license its “full self-driving” (FSD) technology. This move could potentially open up new avenues for collaboration and technology-sharing in the automotive industry.

 

"Tesla's profits surge, defying price cuts."
“Tesla’s profits surge, defying price cuts.”

Elon Musk Expresses Willingness to License Tesla’s Self-Driving Technology

During a recent call with investors, Elon Musk, the CEO of Tesla, revealed that the company is open to sharing its self-driving technology with others through licensing agreements. While discussing the potential for licensing, Musk did not provide specific details about how the technology would be utilized.

Among major automakers, Tesla stands out with its assertive claims of having advanced technology that enables cars to drive themselves, even though drivers are still required to remain attentive behind the wheel. Tesla offers its Full Self-Driving (FSD) capabilities to customers at a cost of $15,000.

However, there have been notable incidents involving Tesla vehicles in FSD mode, including accidents, some of which involved collisions with emergency vehicles at the scenes of other accidents. In response to safety concerns, the National Highway Traffic Safety Administration recalled all 363,000 Tesla vehicles with FSD software in the United States, citing inadequate adherence to traffic safety laws, which posed an unreasonable risk to motor vehicle safety.

Despite these setbacks, Musk maintained that cars operating in FSD mode are already safer than those driven by humans. He attributed the continuous improvement of FSD to the vast amount of data collected from vehicles using this mode, stating that around 300 million miles have been driven with FSD engaged. He expressed confidence that this figure would rapidly increase into billions and tens of billions of miles, leading to FSD surpassing human drivers’ safety standards by tenfold.

However, Musk also acknowledged that some of his previous predictions about the capabilities of Tesla’s FSD mode have not been realized. He referred to himself humorously as “the boy who cried FSD” and admitted that while he believes Tesla’s FSD will outperform human drivers by the end of the year, it does not guarantee immediate approval from regulators.

Following the earnings report, Tesla’s shares experienced a slight dip of about 2% in after-hours trading, after closing down 1% earlier in the day. Nonetheless, the company’s stock has seen remarkable growth, surging by 136% since the beginning of the year, a significant turnaround from the 65% decline it faced in value last year.

By admin

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