Tesla Q2 2023 earnings call was a rollercoaster ride of ups and downs, with the electric vehicle (EV) manufacturer reporting higher-than-expected deliveries but lower operating margins. In this article, we’ll take a closer look at the key takeaways from the call, including Tesla’s response to the global chip shortage, its Autopilot rewrite, and the progress of its Full Self Driving (FSD) features.

Deliveries and Margins

Tesla reported 466,140 total vehicle deliveries for Q2 2023, which was higher than Wall Street expected. However, the company’s operating margins came in at 9.6%, the lowest for at least the last five quarters, and the total gross margin came in at 18.2%, also a low for the same period. Tesla explained that its lower margins resulted from reduced average sales prices “due to mix and pricing” of the cars it has been selling, and the cost of ramping up production of battery cells it designed in-house, known as the 4680 cells, among other factors.

Revenue

Revenue from Tesla core automotive business rose 46% year-over-year to $21.27 billion, about a 6.5% increase sequentially. Its energy generation and storage revenue — from solar installations and backup batteries — rose 74% year-over-year to $1.51 billion. With more vehicles on the road, Tesla “services and other” revenue, including fees for out-of-warranty vehicle repairs, rose 47% to $2.15 billion.

Chip Shortage

Tesla has been hit hard by the global chip shortage, which has upended the auto industry at a time of historic demand for new cars. However, the company has responded by rewriting its vehicle software to support alternative chips, according to CEO Elon Musk. Tesla has also re-engineered software for vehicles to use different types of chips, with a single chip serving dual functions in some cases. Going forward, Tesla will work to “integrate more functionality into fewer chips, like the way that it’s gone with laptops and phones,” according to Andrew Baglino, senior vice president of powertrain and energy engineering.

Autopilot Rewrite

Tesla is also working on an Autopilot rewrite to extend its FSD features. The Autopilot rewrite started with 3D labeling, which improved the labeling accuracy for each frame used. Tesla’s director of AI and computer vision, Andrej Karpathy, is currently training Tesla neural net with incredible amounts of data from Tesla fleet to improve Autopilot. The rewrite uses a technique taught by the founder of Waymo in his online self-driving car engineering classes.

Cybertruck and Other Updates

Tesla crossover, the Model Y, became the best-selling vehicle worldwide in Q1 2023. Tesla said in an investor deck that Cybertruck “factory tooling” is on track but the company is only producing “release candidate” builds so far. Investors are also seeking updates on the company’s progress toward developing an autonomous or robotaxi-ready vehicle. While Musk touted Tesla self-driving ambitions in 2016, the company has yet to complete its mission of conducting a hands-free trip across the U.S.

And here’s a look at the financial summary:

Conclusion

Tesla Q2 2023 earnings call was a mixed bag of results, with higher deliveries but lower margins. However, the company’s response to the global chip shortage and its Autopilot rewrite show that it is committed to innovation and improving its products. With updates on the Cybertruck and other projects, Tesla future looks bright, and investors will be eagerly awaiting further news on the company’s progress.