TSLA Q2 2022 Earnings

Call Details

• Call Title: Tesla, Inc. Q2 2022 Earnings Call
• Date: July 20, 2022 at 12:00 PM UTC
• Management Team:
  • Elon Musk (CEO)
  • Zachary Kirkhorn (CFO)
  • Drew Baglino (SVP of Powertrain and Energy Engineering)

Call Summary

Financial Performance

• GAAP automotive gross margin declined sequentially to 27.9% in Q2 as stated on the call.
• Tesla reported one of its strongest operating margins at 14.6% for the quarter.
• Free cash flow was negatively impacted by working capital build related to the Shanghai shutdown and is expected to show a benefit in Q3 as working capital restabilizes.
• Energy business achieved record gross profit driven by the highest solar volumes in many years.
• Storage (Powerwall and Megapack) remained component constrained during Q2, limiting energy storage deliveries and revenue conversion.
• Automotive margins were pressured by idle capacity and factory restart costs from Shanghai and ramp inefficiencies from Austin and Berlin.

Guidance

• Tesla reiterated a still-targeted 50% vehicle growth for the year, but stated the target has become more difficult.
• Austin and Berlin ramp inefficiencies are expected to continue to depress margins for the remainder of the year, with the impact reducing as ramp progresses.
• Company expects recognized global pricing to continue to increase as backlog flows through, subject to foreign exchange headwinds.
• CFO said inflation-related cost increases were largest in Q2 and are expected to increase in Q3 at a lower rate than Q2.
• FSD beta is on track to be released to all North American customers before the end of this year, subject to regulatory approval for other regions.
• Cybertruck production readiness remains targeted for the middle of next year.