Tesla(TSLA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements show a YoY decrease in revenue and net income despite an increase in total assets Consolidated Balance Sheets Total assets grew to $128.57 billion, driven by property and equipment, while total liabilities also increased Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $61,133 | $58,360 | | Cash and cash equivalents | $15,587 | $16,139 | | Inventory | $14,570 | $12,017 | | Property, plant and equipment, net | $38,574 | $35,836 | | Total Assets | $128,567 | $122,070 | | Total Current Liabilities | $30,008 | $28,821 | | Total Liabilities | $50,495 | $48,390 | | Total Stockholders' Equity | $77,314 | $72,913 | Consolidated Statements of Operations Q2 2025 revenue and net income declined YoY due to lower automotive sales and increased operating expenses Q2 2025 vs Q2 2024 Performance (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $22,496 | $25,500 | (11.8%) | | Automotive Revenues | $16,661 | $19,878 | (16.2%) | | Energy Gen. & Storage | $2,789 | $3,014 | (7.5%) | | Services and Other | $3,046 | $2,608 | 16.8% | | Gross Profit | $3,878 | $4,578 | (15.3%) | | Income from Operations | $923 | $1,605 | (42.5%) | | Net Income (to common stockholders) | $1,172 | $1,400 | (16.3%) | | Diluted EPS | $0.33 | $0.40 | (17.5%) | Six Months 2025 vs 2024 Performance (in millions, except EPS) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $41,831 | $46,801 | (10.6%) | | Gross Profit | $7,031 | $8,274 | (15.0%) | | Income from Operations | $1,322 | $2,776 | (52.4%) | | Net Income (to common stockholders) | $1,581 | $2,790 | (43.3%) | | Diluted EPS | $0.45 | $0.81 | (44.4%) | Consolidated Statements of Cash Flows Operating cash flow increased to $4.70 billion for H1 2025, while net cash used in investing activities decreased Six Months Ended June 30 Cash Flow Summary (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,696 | $3,854 | | Net cash used in investing activities | ($4,595) | ($8,309) | | Net cash (used in) provided by financing activities | ($554) | $2,736 | | Net decrease in cash | ($302) | ($1,835) | Notes to Consolidated Financial Statements Disclosures highlight deferred FSD revenue, Bitcoin holdings, increased finished goods inventory, and total debt - Deferred revenue related to FSD features and other items amounted to $3.75 billion as of June 30, 2025[30] - As of June 30, 2025, the company held 11,509 units of Bitcoin at a cost of $386 million, with a fair value of $1.235 billion[54] - Finished goods inventory increased to $6.39 billion from $3.94 billion at the end of 2024, contributing to a total inventory of $14.57 billion[58] - Total debt and finance leases stood at $7.22 billion as of June 30, 2025, with an additional $5.00 billion available under an unused credit facility[66] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses decreased revenue and income, focusing on future growth from FSD and cost reductions Overview The company focuses on profitable growth, FSD deployment, and cost reduction amid lower H1 2025 vehicle deliveries - Produced approximately 773,000 consumer vehicles and delivered approximately 721,000 through Q2 2025[103] - Launched Robotaxi service in Austin in June 2025, capitalizing on AI investments[103] - Deployed 20.0 GWh of energy storage products through Q2 2025[104] - Ended Q2 2025 with $36.78 billion in cash and cash equivalents and investments[106] Management Opportunities, Challenges and 2025 Outlook Future growth relies on new products and autonomy, facing challenges from competition and regulatory changes - The company's factories are preparing for the release of new models later in 2025[107] - Challenges include cyclical industry trends, political uncertainty, inflationary pressures, and rising interest rates[110] - The recently signed OBBBA, which removes certain EV tax credits, may negatively impact consumer demand[111] - Capital expenditures are expected to exceed $9.00 billion in 2025[114] Results of Operations Q2 revenue fell 12% YoY, driven by lower automotive sales, while energy gross margin significantly improved - Q2 automotive sales revenue decreased by $2.74 billion (15%) YoY, due to a decrease of approximately 57,000 vehicle deliveries and lower ASPs[119] - Q2 automotive regulatory credits revenue decreased by $451 million (51%) YoY[121] - Q2 energy generation and storage gross margin increased to 30.3% from 24.6% YoY, due to lower average costs[133] - Q2 R&D expenses increased by $515 million (48%) YoY, primarily due to costs related to AI and other new technology programs[134] Liquidity and Capital Resources The company maintains adequate liquidity with strong cash reserves to fund over $9.00 billion in 2025 capex - The company believes current sources of funds will provide adequate liquidity for the next 12 months and in the long-term[143] - As of June 30, 2025, the company had $15.59 billion in cash and cash equivalents and $5.00 billion of unused committed credit[148] - Expected capital expenditures for 2025 are projected to exceed $9.00 billion[145] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is unhedged foreign currency exposure, mainly from the yuan and euro - The company's main market risk is foreign currency risk related to revenues and expenses denominated in currencies like the Chinese yuan and euro[155] - A reasonably possible adverse change of 10% in foreign currency exchange rates could impact net income before taxes by $1.31 billion[157] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[159] - No material changes occurred in the internal control over financial reporting during the quarter ended June 30, 2025[160] PART II. OTHER INFORMATION Legal Proceedings The company faces material litigation concerning the CEO Performance Award, discrimination claims, and Autopilot/FSD - The company is appealing a court decision that rescinded the 2018 CEO Performance Award and awarded plaintiff's counsel $345 million in fees[77] - The company is involved in ongoing litigation and investigations regarding alleged systemic race discrimination and harassment[86][87] - Tesla is defending against multiple proposed class-action lawsuits alleging misrepresentations related to Autopilot and FSD[89][90] Risk Factors The reduction or elimination of government incentives for EVs and energy products poses a significant risk to demand - Recent governmental actions have repealed and/or restricted consumer tax credits, which may negatively impact demand for Tesla's products[163] - Provisions of the OBBBA could increase battery cell expenses and consumer costs for energy products, negatively impacting demand[164] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the quarter - None[165] Defaults Upon Senior Securities There were no defaults upon senior securities to report for the quarter - None[166] Mine Safety Disclosures This item is not applicable to the company - Not applicable[167] Other Information A director adopted a Rule 10b5-1 trading plan for the potential sale of up to 240,000 shares of common stock - On May 20, 2025, director James Murdoch adopted a Rule 10b5-1 trading arrangement for the potential sale of up to 240,000 shares[169] Exhibits This section lists all exhibits filed with the report, including required certifications and XBRL data