Top

China Cloud on Tesla’s Q2 2022 Numbers; Fundamentals Remain Strong

  • Blogs
  • / Team Counterpoint
  • Tesla sold more than 254,000 vehicles in Q2 2022, an increase of 27% YoY, which was below general expectations.
  • This was the first time since the COVID-19-hit 2020 that the automaker experienced a sequential decline in sales.

After achieving phenomenal growth in Q1 2022, Tesla’s global sales during Q2 2022 grew by just 27% YoY to over 254,000 units, falling short of expectations. In QoQ terms, the sales fell 18%. Business during Q2 2022 was affected by COIVD-19-related shutdowns in China. Production units in and around Shanghai were closed temporarily due to strict lockdown measures. As a result, Tesla sold just 89,000 cars across China during Q2 2022. Cumulative sales in China during April and May fell by more than 66% YoY. The situation improved only after the production returned to full capacity in June.

It was expected that the Berlin Gigafactory would boost Tesla’s sales in Europe after becoming operational in March 2022. But the production was lower than expected. A few rumored reasons for the low production are litigation with the German government and a shortage of human resources. The Berlin factory is currently focusing on the production and deliveries of the Model Y across Europe.

Tesla bets on in-house battery cell manufacturing

Tesla delivered its first batch of cars equipped with the in-house 4680 battery cells and structural battery packs during this quarter. These cells use a little amount of lithium. With lithium prices soaring worldwide, 4680 cells will help lower the vehicle manufacturing cost. The cells will power the Model Ys coming out of the Berlin Gigafactory. However, Tesla will shut the Berlin Gigafactory for a couple of weeks during autumn to upgrade the production system of 4680 cells.

Other businesses see 33% YoY growth

Although Tesla’s vehicle sales in Q2 2022 failed to meet expectations, its other businesses like energy deployment and storage, charging and other services grew more than its vehicle segment. Energy deployment, energy storage, charging and other services grew by 33% YoY. Tesla deployed 106 MW of solar panels and 1.13 GWh of energy storage during Q2 2022. It installed 247 new superchargers worldwide, bringing its global supercharger number to 3,971 units with more than 36,000 connectors.

Tesla converts 75% of its Bitcoins to fiat currency

During Q2 2022, Tesla also converted 75% of its Bitcoins to fiat currency. This was done to have a better cash position against the backdrop of COIVD-19-related uncertainties. This conversion reduced Tesla’s digital assets to $218 million and added $936 million in cash to Tesla’s balance sheet.

 

Tesla Revenue by Segment, Q2 2021-Q2 2022_Counterpoint
Source: Tesla Q2 2022 Financials and Counterpoint Analysis

Q2 2022 Financial Results

  • During Q2 2022, Tesla sold more than 254,000 vehicles at 27% YoY growth. The Model 3 and Model Y comprised more than 93% of these sales.
  • Revenue from vehicle sales stood at $14.6 billion. Total revenue grew by almost 42% YoY, with the COVID-19 impact on China reducing the QoQ number by about 10%. Revenue generated from automotive credit also declined slightly compared to Q2 2021.
  • The company’s other services, like energy storage, charging and insurance, contributed to 14% of its total revenue. Revenue from insurance and vehicle services saw a 54.2% YoY growth, while the energy storage and charging segment grew by just 8% YoY. The energy storage business was expected to perform better but was restricted due to semiconductor-related supply issues.
  • Tesla’s gross profit during Q2 2022 reached $4.2 billion and stood at 25%. Though the shutdown in China adversely affected the business, increase in US deliveries along with the higher average vehicle price helped Tesla earn 47% more profit YoY.
  • R&D costs grew 16% YoY during Q2 2022. Tesla is trying to achieve complete autonomy by 2024 by perfecting Full-Self Driving (FSD) software. But the resignation of Andrej Karpathy, the director of artificial intelligence and autopilot system at Tesla, in mid-July is likely to stall the progress of this project, which is expected to get delayed by a year.
Tesla Production and Deliveries, Q2 2021-Q2 2022_Counterpoint
Source: Tesla Q2 2022 Financials and Counterpoint Analysis

Market Outlook

Despite experiencing a dip during the second quarter of 2022, Tesla’s future outlook seems strong and promising with strong fundamentals. Tesla has secured the supply of LFP batteries for its Shanghai Gigafactory by signing a deal with BYD. Transitioning to LFP batteries and 4680 battery cells will help Tesla reduce vehicle manufacturing costs. Moreover, Tesla expects the Berlin Gigafactory production capacity to cross 100,000 units by the end of 2022. With all these developments, Tesla is expected to cross more than 1.2 million units of vehicle deliveries by the end of 2022.

Related Posts:

Team Counterpoint

Counterpoint research is a young and fast growing research firm covering analysis of the tech industry. Coverage areas are connected devices, digital consumer goods, software & applications and other adjacent topics. We provide syndicated research reports as well as tailored. Our seminars and workshops for companies and institutions are popular and available on demand. Consulting and customized work on the above topics is provided for high precision projects.
Click here to see all posts by this author
List
  • DEVICES
  • ECOSYSTEM
  • RECENT POSTS

Counterpoint Weekly Newsletter

Read Here

Coverage

Insights

Social media

Contact us

Copyright ⓒ Counterpoint Technology Market Research | All rights reserved

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited

Registration

In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.