Elon Musk has a lot on his plate these days. Tangling with Twitter over spambots. Sending Starlink satellites beyond the stratosphere. Crusading on the consequences of low birth rates (and doing his part to help).
So the industrious entrepreneur could be forgiven for losing a little focus when it comes to his primary passion project: building Tesla into the world’s most important automaker.
Yet Wednesday’s quarterly earnings conference call showed that Musk remains finely attuned to Tesla’s travails. He dove deep into manufacturing minutiae, supply chain snarls, and vehicle demand. He even eschewed the opportunity to pontificate about semi-distant technologies, like A.I.-powered robots and robotaxis. In sum, Musk was downright boring.
For Tesla, monotony isn’t such a bad thing these days. Despite numerous hurdles—COVID-related shutdowns at its Shanghai plant, global economic uncertainty, the constant hoopla surrounding Musk, to name a few—the world’s leading electric automaker churned out yet another solid quarter.
Tesla topped second-quarter earnings estimates and fell slightly short of revenue forecasts, an overall pleasing performance given unprecedented obstacles. Deliveries did fall compared to the prior quarter (about 254,700, down from 310,000), as did automotive gross margins (from 32.9% in the first quarter to 27.9% in the second quarter). And Tesla revealed that it sold $936 million worth of Bitcoin, equal to about 75% of its holdings in the cryptocurrency, to shore up liquidity concerns.
Still, the results more than satisfied Tesla investors, whose faith in the company has been tested by production snags and the overhang caused by Musk’s battle with Twitter. Tesla shares rose 10% in mid-day trading Thursday, bringing its year-to-date loss down to 32%.
“Q2 was a unique quarter for Tesla due to a prolonged shutdown of our Shanghai factory,” Musk said. “But in spite of all these challenges, it was one of the strongest quarters in our history. Most importantly, in June, we achieved production records in both Fremont (site of Tesla’s California factory) and Shanghai. And as a result, we have the potential for a record-breaking second half of the year.”
While Musk often makes media waves for his off-the-factory-floor antics, the second-quarter results reinforce Tesla’s manufacturing might.
Company officials said their pre-Shanghai shutdown goal of increasing vehicle output by 50% remains within reach, even after lockdowns in May slowed production. Plants that opened this spring in Austin and the Berlin area, which Musk recently decried as “gigantic money furnaces,” reached positive gross margin for the quarter following a strong end to June.
If anything, Tesla could benefit from more manufacturing capacity. Company executives swatted away questions about an inflation-driven decline in demand for Tesla vehicles, with Musk bluntly declaring: “Tesla does not have a demand problem. We have a production problem.”
Eventually however, Musk will need to back up some of the grandiose talk and promises for Tesla’s next generation of groundbreaking products.
Musk said Wednesday that he hopes to start delivering Tesla’s long-awaited Cybertruck in mid-2023, and he boasted that the company will “solve” self-driving cars later this year. But previous proclamations on both fronts haven’t materialized, and rival automakers are catching up on Tesla. (To wit: TechCrunch reported Wednesday that Chinese search giant Baidu, which has ventured into the EV space, unveiled an all-electric, autonomous robotaxi that could hit cities by 2023.)
Still, Musk and company could be forgiven for, at least in public, prioritizing nuts-and-bolts manufacturing over tantalizing technologies. At this moment, Tesla’s primary job is producing vehicles—and it’s doing a darn good job under difficult circumstances.
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Jacob Carpenter
NEWSWORTHY
Dr. Alexa is in. Amazon has struck a deal to buy 1Life Healthcare, the company behind a national network of primary-care practices, for $3.9 billion, The Wall Street Journal reported Thursday. The purchase marks another step in Amazon’s expansion into the health care sector, where the e-commerce giant hopes to build a full-service outpatient support network. 1Life Healthcare is better known by the brand name One Medical, which provides health benefits to employees of roughly 8,000 companies.
A privacy breakthrough. The House Energy and Commerce Committee voted near-unanimously Wednesday to advance a bill that could become the nation’s first comprehensive data collection and privacy legislation, Reuters reported. Committee members advanced the bill on a 53-2 vote, sending it to the House floor for consideration after numerous concessions by both political parties. The legislation sets national data privacy standards and gives people the right to sue companies over violations of the proposed law, among several other provisions.
More hiring delays. Microsoft and Alphabet unit Google are reportedly taking more steps to slow their hiring pace, building on earlier commitments to trim expenses amid the economic downturn. Bloomberg reported Wednesday that Microsoft is eliminating many job openings, including some in the cloud and security software departments, where the company faces stiff competition from Amazon and Alphabet unit Google. The Information also reported that Google will halt hiring for two weeks, using that time to reassess staffing needs.
A TikTok-like transformation. Facebook unveiled changes Thursday to users’ primary landing page, a redesign that emphasizes algorithmic-driven recommendations and short-form videos, The Verge reported. The update marks the Meta unit’s latest step toward mirroring large parts of ByteDance’s TikTok, the social media app that has eaten into the market share of Facebook and sister site Instagram. Facebook users will see a tab for the TikTok-like feed, along with a second tab that more closely resembles a traditional feed featuring posts from friends, family, and acquaintances.
FOOD FOR THOUGHT
Can’t cover the tab. Breaking up with Huawei is hard—and prohibitively expensive—to do for some American telecom companies. Politico reported Thursday that nearly 200 small U.S. carriers are still using the Chinese firm’s equipment in their networks, despite a federal push to remove the hardware on national security grounds. The carriers, which largely operate in rural areas, lack the money needed to replace the cheap technology with new parts. And while Congress set aside $1.9 billion in late 2020 to assist carriers with the effort, the Federal Communications Commission now says telecom outfits need another $3 billion to finish the job.
From the article:
The funding shortage is complicating the launch of subsidies and stoking worries that this long-awaited task of ripping out this gear could face delay into 2023 or beyond, undercutting the urgency around a long-held national security fear that the Chinese government could access the equipment to listen in on calls or even interfere with critical infrastructure or military operations.
The logistical strains also threaten American businesses as President Joe Biden and Democrats defend their broader agenda, especially in rural America, ahead of the November midterms.
IN CASE YOU MISSED IT
Commerce Secretary Gina Raimondo warns of the ‘scary’ supply chain scenario that would lead to a ‘deep and immediate’ U.S. recession, by Eamon Barrett
Vitalik Buterin says Ethereum will be ‘55% complete’ post-merge, by Taylor Locke
Another Chinese rocket could tumble to earth soon, by Chris Morris
An Elon Musk action figure? SpaceX toys are on the way, by Chris Morris
‘Minecraft’ developer blasts NFTs for ‘creating a scenario of the haves and the have-nots’, by Tristan Bove
GM wants to test a self-driving car that doesn’t have a steering wheel, pedals or mirrors, by Anurag Kotoky and Bloomberg
BEFORE YOU GO
Everything’s bigger in Texas. Large companies are notorious for making ambitious promises when seeking tax breaks—but Samsung took the practice to another level Wednesday. As the Austin American-Statesmen first reported, the South Korean tech giant is preliminarily seeking approval of tax breaks on 11 new chip manufacturing facilities in Texas, pitching a mammoth investment that could total nearly $200 billion and create 10,000 jobs. The first plants would come online in 2034 (not a misprint) and two others would start operating in 2042 (also not a misprint). In Samsung’s defense, the company says it’s merely gauging the state’s appetite for doling out huge tax breaks, with no definitive plans for expanding in the Lone Star State. I suppose the old adage applies: If you don’t ask, the answer is always no.
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