Tesla's Second-Quarter Profit Declines Amid Increased Research Spending
The electric vehicle maker reported a drop in net income despite a significant rise in revenue and vehicle deliveries.
Tesla's net income decreased in the second quarter, falling to $1.11 billion, or 32 cents per share, compared to $1.17 billion, or 33 cents per share, in the same period last year. Excluding certain charges, earnings were 33 cents per share, down from 40 cents per share a year prior, and missed Wall Street analysts' forecasts of 53 cents per share. The company's revenue, however, increased by 26% to $28.24 billion, surpassing analysts' expectations of $26.42 billion.
This profit reduction occurred as Tesla significantly increased its investment in research and development, which surged approximately 49% from the previous year to $2.37 billion. This marks the highest quarterly spending on R&D in at least the last four quarters.
Despite the dip in profitability, Tesla reported a substantial rise in vehicle deliveries. The company delivered 480,216 cars in the second quarter, a 25% increase year-over-year and the second consecutive quarterly gain, exceeding analyst expectations. The majority of these deliveries consisted of the Model Y crossover SUV and Model 3 sedan, versions of which were made more affordable last year. Reduced leasing and loan costs in Europe also contributed to sales, as did a general increase in electric vehicle purchases in the region, influenced by rising gasoline and diesel prices.
These sales figures represent a significant turnaround from the previous year, when Tesla experienced declining sales and lost its position as the world's largest EV maker to China's BYD. Tesla's energy generation and battery storage business also contributed to its overall revenue, posting $3.14 billion, a 13% increase from the second quarter of last year. Additionally, the company saw benefits from increased subscriptions to its Full Self-Driving (Supervised) driver assistance feature in the U.S.
Following the earnings announcement, Tesla shares fell 2.7% to $363.98 in after-hours trading. The stock had closed the regular trading session down 1.3% and is down nearly 17% year-to-date.