Tesla earnings hit $2.7B on increased sales

Tesla has reported a jump in second-quarter profits as a series of price cuts translated into sharply higher car sales.

Elon Musk's fast-growing electric vehicle company reported profits of $2.7 billion on Wednesday, up 20 percent on the year-ago level.

Revenues surged 47 percent to $24.9 billion — a record for the company as auto deliveries surged 83 percent to 466,140 vehicles.

Total gross margin came in at 18.2 percent, down from 19.3 percent in the prior quarter and below the 18.8 percent expected by analysts.

Tesla characterised the profit margins as "healthy," citing more efficient operations at the newer plants in Berlin and Texas. The results topped analyst estimates for earnings per share and revenues.

Musk described the current macroeconomic backdrop as "turbulent," noting the drag of high-interest rates on consumers and quipping that "one day it seems like the world economy's falling apart and the next day everything's fine."

Price cuts

Musk has undertaken multiple price cuts throughout 2023 on vehicles, telling investors in April that the company has "taken the view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin."

The move comes as more EVs from legacy carmakers like General Motors and Ford are hitting dealerships.

On Monday, Ford announced price cuts of as much as $10,000 on the F-150 Lightning, an electric version of the best-selling pickup, a move that added to concerns about an oversupply of EVs amid consumer anxiety over lack of charging capacity.

Shares of Tesla have more than doubled in 2023 so far as investors have overlooked concerns about shrinking profit margins and cheered other recent Musk initiatives.

Cybertruck

On Saturday, Tesla unveiled from its Texas factory its first Cybertruck, a futuristic silver vehicle that has been eagerly awaited.

In recent weeks, Musk has also announced collaborations with other auto giants including General Motors and Ford to open up use of Tesla's respected EV charging network.

In March, Musk announced a major new factory in Mexico. He has also met recently with both French President Emmanuel Macron and Indian Prime Minister Narendra Modi about potential investments.

In its press release, Tesla said the Cybertruck "remains on track for initial deliveries this year."