[Weekend Money] Tesla Shows Top-Line Growth but Declining Profitability... "Robotaxi Expansion Remains a Challenge"

Tesla Posts Higher Q2 Revenue but Lower Operating Profit
"FSD Emerging as Key Differentiator, Robotaxi Yet to Deliver"
Optimus Faces Challenges in Mass Production Preparation
"Rising Importance of Components"

Heungkuk Securities recently analyzed Tesla’s second quarter earnings, noting that while the company showed top-line growth, its profitability declined. The results also confirmed progress in Full Self-Driving (FSD) technology; however, Heungkuk Securities assessed that more time is needed before the robotaxi business can meaningfully contribute to Tesla’s financials.

According to Heungkuk Securities on July 26, Tesla’s revenue for the second quarter reached $28.236 billion, up 25.5% year-on-year, meeting the market consensus of $27.2 billion. In contrast, its operating profit was $398 million, down 56.9%, falling short of the market expectation of $1.4 billion by 71.3%. Adjusted earnings per share (EPS) were also $0.33, below the consensus of $0.53.

The number of vehicles sold in the second quarter increased to 480,126 units (+25.0%), driving automotive revenue up to $20.5 billion (+23.1%), evidencing strong growth. However, the automotive gross profit margin (GPM), excluding regulatory credits, dropped to 16.3%, down 2.9 percentage points from the previous quarter. Heungkuk Securities attributed the GPM decline to increased incentives for expanding sales, which put pressure on the average selling price (ASP), as well as to a softening in the sales mix following the end of Model S·X production.

In the energy division, the amount of energy storage systems (ESS) deployed soared to 13.5GWh, up 41% year-on-year. Nevertheless, the GPM was 20.4%, a significant decline compared to the previous quarter’s 39.5% and the previous year’s 30.3%. However, Gunwoo Ma, a researcher at Heungkuk Securities, explained, “Profitability in the previous quarter benefited from a one-off gain due to tariff refunds. Considering that management has guided for the long-term GPM of the energy division to be in the mid-20% range, profitability is expected to normalize at that level going forward.”

The number of active FSD subscribers in the second quarter stood at 1.48 million, a 56% increase from a year earlier. The FSD subscription purchase rate for newly delivered vehicles in North America exceeded 55%. Heungkuk Securities evaluated this as evidence that FSD has become a key differentiating factor, going beyond being merely an optional feature after purchase.

On the other hand, Heungkuk Securities believes that challenges remain in the expansion of the robotaxi business. Researcher Ma noted, “While Tesla disclosed the cumulative commercial mileage for paid robotaxi operations in this earnings report, it still did not present the core metrics necessary to assess the commercial viability of this business. While there is consensus within the company on the need to validate technological versatility over short-term fleet expansion, in order to secure market confidence, it will also be necessary to rapidly enhance service density within individual cities.”

The company diagnoses that the humanoid robot ‘Optimus’ is encountering difficulties in the process of preparing for mass production, largely because there is no established supply chain for humanoid-specific components. Researcher Ma stated, “Bottlenecks in humanoid mass production exist with AI models and training data, but also on the hardware side. The importance of establishing supply chains for key parts, such as actuators, that can support stable mass production will become increasingly apparent going forward.”

He further added, “Such challenges are likely to be common throughout the humanoid industry. As the humanoid market expands and mass production approaches, companies with large-scale production experience accumulated in the automotive industry will become more competitive as they move into the robot components market.”

This content was produced with the assistance of AI translation services.