Tesla's Record Revenue Hides Declining Margins and Reliance on SpaceX Gains
Tesla (TSLA) reported a record revenue of $28.24 billion for Q2, driven by strong vehicle deliveries that rose 25% year-over-year to 480,126 units. However, the company's operating profit fell sharply by 57%, dropping from $939 million in the prior year to just $398 million this quarter. Gross margins on its core car business declined significantly to 16.3% compared to 19.2% a year ago, and regulatory credit revenue—once a major profit driver for Tesla—plummeted by two-thirds to $146 million. The bulk of Tesla's net income was not from operations but rather an unrealized gain on its equity stake in SpaceX (SPCX). The company recorded a $1.005 billion pre-tax mark-to-market gain, which accounted for nearly 70% of the reported net profit after tax. This gain came as a result of Tesla's investment in xAI, later absorbed by SpaceX before going public. The divergence between operating and net income highlights growing concerns about Tesla’s profitability from its core business alone.
Topics: cash burn margins profitability revenue