Tesla surpassed the $1 billion profit mark for the first time on the strength of record-setting production and deliveries during the second quarter.
The California-based EV maker’s $1.1 billion profit was matched by its 11% margins. The company reported revenue of $11.96 billion during the quarter, exceeding analysts’ estimates of $11.4 billion for the quarter, according to FactSet.
Much of the company’s revenue came from its automotive division, which posted a 97% year-over-year increase for Q2 of $10.2 billion. Perhaps just as importantly, its regulatory credits contributed just $354 million, a decline of 17 percent.
“Our operating income improved in Q2 compared to the same period last year to $1.3 billion,” the company said in its report to shareholders, “resulting in an 11% operating margin. This profit level was reached while incurring SBC expense attributable to the 2018 CEO award of $176 million in Q2, driven by a new operational milestone becoming probable.”
Profits come using tried-and-true formula
The company noted its operating income rose because of “volume growth and cost reduction.” The improvements came despite a $23 million hit it took for dabbling in Bitcoin and production issues associated with semiconductor shortages.
Employees charged with cutting costs and improving production performed well during the quarter, Tesla noted, but to earn big profits in the second half of the year, they’ll need to remain diligent.
“With global vehicle demand at record levels, component supply will have a strong influence on the rate of our delivery growth for the rest of the year,” the company said in the report.
EV sales hit at an all-time high in the U.S. during the second quarter, and Tesla recognizes the market is changing. “Public sentiment and support for electric vehicles seems to be at a never-before-seen inflection point,” it said in the report. “We continue to work hard to drive down costs and increase our rate of production to make electric vehicles accessible to as many people as possible.”