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Lorenzo Di Cola | Nurphoto | Getty Images
Social network Twitter, recently rebranded as X, has commandeered the handle “@music” from open-source software developer Jeremy Vaught, who told CNBC he created the account in 2007, and had built a community of around half a million followers there.
While Elon Musk-led X gave Vaught no choice but to surrender the desirable username on its platform, he was offered the option to choose from a list of other handles related to the topic of music. His X-assigned account, which is “@musicfan,” is not to his liking but he’s settling for it for now. X ported his followers over to the new account at least, he said.
The move on the part of the social media company raises questions about the worth of a handle on its platform. X terms of service, last updated in May, say, “We may also remove or refuse to distribute any Content on the Services, limit distribution or visibility of any Content on the service, suspend or terminate users, and reclaim usernames without liability to you.”
The threat of losing a handle may make it hard for creators to trust the platform enough to build there long-term Vaught told CNBC.
While he had not monetized his “@music” account, Vaught sometimes took the opportunity to review consumer hardware, mostly from the makers of headphones, ear buds and other accessories seeking his opinion, given his status as a social media influencer.
Many years ago, Vaught worried whether Twitter’s prior management would try to take over his handle. However, before Musk had acquired and appointed himself to the C-suite there, Twitter decided to leave “@music” alone and established its own “@twittermusic” brand instead.
It’s not clear what X plans to do with the “@music” account now. On Thursday, the company posted a photo of the musician Ed Sheeran there, holding a copy of his 2014 album “x” which is pronounced “multiply.” Representatives for Sheeran, X, and Musk did not immediately respond to a request for comment.
Vaught said he has previously invested in another Musk-led company, electric vehicle maker Tesla, though he holds no shares currently. He has also paid a $100 refundable fee to reserve a Tesla Cybertruck, the company’s trapezoidal pickup truck for which Tesla has yet to disclose final specs and pricing.
Vaught told CNBC he is still using X, though he did set up a new account on Meta’s text-based competitor Threads, and another on Mastodon. “The software development community is active on Twitter to this day,” Vaught explained. “So for that reason alone it’s still the most interesting social that I have.”
Jeremy Vaught is a software developer and creator of “@music” on Twitter.
Jeremy Vaught
Vaught was disappointed that X would take over a handle from a user who invested 16 years into its platform with nothing but impersonal correspondence, more akin to a technical support help ticket.
“I was definitely proud of having built @music to a half a million followers give or take,” he added. “And I’m a software developer. I had been thinking about what I could build around this to potentially capitalize on my audience.”
When Twitter rebranded to X abruptly last month, it took over the handle of another long-time user who had the name “@x” on the platform, as NBC News reported, raising questions about intellectual property, and users’ rights on social media.
When X notified Vaught that he would have to give up his username, it assigned him the handle “@musicfan,” and offered a list of other suggested handles he could choose from. Looking through those, he said he felt uneasy.
He discovered that “@musicfan” had been created in 2011, according to the site. Vaught said he hopes that X hasn’t taken something away from another user to give to him, but he couldn’t get a definitive answer from Musk’s social media company either.
“The whole thing is just skeezy,” he said.
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Fisker earnings, reported Friday morning, topped analyst expectations, but that was the extent of the good news.
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An XPeng Inc. G9 electric vehicle at the Shanghai Auto Show in Shanghai, China, on Monday, April 24, 2023.
Qilai Shen | Bloomberg | Getty Images
Global electric vehicle makers are tapping advanced technology to vie with each other and domestic brands in the intensively competitive Chinese market.
China is the world’s largest EV market with 5.9 million units sold in 2022, capturing 59% of EVs sold globally, according to Canalys. Counterpoint Research data showed that domestic brands command 81% of the EV market, with BYD, Wuling, Chery, Changan and GAC among the top players.
“China’s domestic brands are leading the market in the development and implementation of advanced assisted driving systems, capitalizing on their early-entry advantages in the electric and intelligent vehicle sector,” research firm Canalys said in a recent report.
“These brands have an edge over other joint ventures in the planning and execution of smart assisted driving systems.”
BofA Securities in a May report said it expects China to still be the world’s largest EV market in 2025, standing at 40%-45% market share.
“China auto makers are accelerating vehicle platform, technology upgrade or innovation, leading to outstanding user experience. China EV products are much more competitive than before, and China will continue to see EV penetration expanding, in our view,” said the BofA Securities analysts.
But these global players are now stepping up their efforts.
On Friday, BMW China announced that it is accelerating the development of hands-free autonomous driving features, also known as Level 3 or L3 functions. BMW China said it plans to roll those out by end of 2023 or early 2024 and will ensure compliance with local regulations.
L3 autonomous driving has not been widely approved in China, though some companies including domestic EV maker Xpeng has been authorized to test the technology.
The Chinese market is growing at an unprecedented pace. Toyota will also work together as a group to reform how we work & think to survive in China.
Tatsuro Ueda
CEO of the China Region, Toyota
Last week, Germany’s Volkswagen Group said it is investing approximately $700 million in Xpeng and taking a 4.99% stake in the company.
“We are now accelerating the expansion of our local electric portfolio and at the same time preparing for the next innovation step,” Ralf Brandstätter, Volkswagen AG board member for China, said in a company statement.
Volkswagen and Xpeng will co-develop two new EVs that will incorporate its advanced driver-assist software for the Chinese market and aims to roll them out in 2026.
For example, BYD is partnering with Nvidia and Horizon Robotics to develop autonomous driving technology. On Monday, Chinese automaker Leapmotor told reporters it developed a new platform and aims to license it to other automakers to make intelligent EVs. On the same day, Japanese automaker Toyota said it will boost its development of EV technology, in a bid to compete in the Chinese market.
“The Chinese market is growing at an unprecedented pace. Toyota will also work together as a group to reform how we work & think to survive in China,” Tatsuro Ueda, CEO of China for Toyota, said in a company statement.
“By promoting local development … we will attempt to develop and provide competitive products that can satisfy Chinese customers at a fast pace.”
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UAW President Shawn Fain chairs the 2023 Special Elections Collective Bargaining Convention in Detroit, March 27, 2023.
Rebecca Cook | Reuters
United Auto Workers (UAW) President Shawn Fain said on Tuesday the union was seeking ambitious benefit increases in contract talks with the Detroit Three automakers, including double-digit pay rises and defined-benefit pensions for all workers.
The UAW presented its economic demands to Chrysler-parent Stellantis on Tuesday and will make presentations to General Motors (GM) Wednesday and Ford Thursday ahead of the Sept. 14 expiration of the current four-year contracts, Fain said.
They include proposing to make all temporary workers at the U.S. automakers permanent, placing new strict limits on the use of temporary workers and increasing paid time off.
Fain also wants increases in pension benefits for current retirees and to ensure all workers get defined-benefit pensions.
The union leader, in Facebook Live remarks, called the demands “the most audacious and ambitious list of proposals they’ve seen in decades.”
Fain said the CEOs of the Detroit Three saw their pay rise by 40% on average over the last four years.
He singled out GM CEO Mary Barra, who received $29 million of compensation in 2022, and said it would take an entry level worker at a GM joint venture battery plant 16 years to earn as much as she made in a week.
Fain listed numerous demands, including restoring retiree health care benefits and cost of living adjustments. He also said the UAW was proposing to have the right to strike over plant closures and to eliminate the two-tier wage system under which new hires earn 25% or more less than veteran employees.
He noted the Teamsters recently won an end to two-tiered wages in a new contract with UPS. “It’s wrong to make any worker a second class-worker. We can’t allow it any longer,” Fain said of the demand for the same at the Detroit Three.
Stellantis said it had a “very productive meeting” with Fain and the bargaining committee and would review the union requests to understand how they aligned with company proposals and where common ground could be found.
“We are not seeking a concessionary agreement,” Stellantis said.
GM said it would review the demands once they were received from the UAW on Wednesday.
Ford said it looked “forward to working with the UAW on creative solutions during this time when our dramatically changing industry needs a skilled and competitive workforce more than ever.”
Fain also said the Detroit Three need to pay better wages for workers at battery joint venture plants and praised Democratic senators last week for urging the companies to include those workers under the master agreements.
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The Mercedes-Benz high-performance 2007 R63 AMG model.
Scott Olson | Getty Images News | Getty Images
Daimler Truck achieved a record adjusted return on sales in its second quarter of 10.3% for its industrial business making trucks and buses, the company said on Tuesday, boosted by considerable growth in its North America and Asia business.
Unit sales rose by 9% with revenue up 15%, indicating the company had upheld its strategy of combatting rising costs by hiking prices – but incoming orders were down by 12% in the first half of the year, results showed.
Earnings per share in the quarter fell slightly to 1.11 euros compared to 1.12 euros in the prior year period, the company said.
Daimler Truck raised its guidance for annual adjusted sales returns across the group last month to a range of 8.5% to 10% from 7.5% to 9% previously, citing easing of supply chain constraints, stronger demand in its core markets and the after-sales business.
The company struggled in the first quarter with supply chain issues for semiconductors, but has maintained throughout the year that a general improvement in supply chains would lift its profits.
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Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE
DETROIT — General Motors is raising its 2023 guidance for a second time this year after the automaker reported second-quarter results Tuesday that were up sharply year over year.
The Detroit automaker also said it is increasing cost-cutting measures through next year and now plans to reduce $3 billion in expenditures compared with previous guidance of $2 billion.
GM CFO Paul Jacobson said the reductions will include sales and marketing spending, salary employment, and other costs.
GM shares were initially up in premarket trading following the results but were down nearly 3% just after the market opening.
Here’s what GM reported for its second quarter:
GM’s earnings included an unexpected $792 million charge for new commercial agreements between GM and LG Electronics and LG Energy Solution. The cost is a result of the automaker sharing expenses with the companies for a recall of its Chevrolet Bolt EV models in recent years, which were previously expected to be paid by the LG companies.
Taking that charge into account, the company reported adjusted earnings before interest and taxes of $3.23 billion.
On an unadjusted basis, the company reported net income attributable to stockholders of $2.57 billion, or $1.83 per share, up nearly 52% from a year earlier when it earned $1.69 billion, or $1.14 per share.
Revenue during the quarter jumped 25% compared with $35.76 billion a year earlier.
For the full year, GM is raising its adjusted earnings expectations to a range of $12 billion to $14 billion, up from a previous range of $11 billion to $13 billion. GM also increased expectations for adjusted automotive free cash flow to a range of $7 billion to $9 billion, up from $5.5 billion to $7.5 billion, and for net income attributable to stockholders of $9.3 billion to $10.7 billion, compared with the previous outlook of $8.4 billion to $9.9 billion.
Jacobson said the raise is a result of stronger-than-expected pricing, demand and capital discipline.
However, the guidance increase is contingent on GM successfully negotiating new labor agreements with the United Auto Workers and the Canadian Unifor unions this year without a work stoppage or strike. The UAW has new leadership that has publicly been far more confrontational than prior union officers. The current contracts covering roughly 150,000 union workers for the Detroit automakers are set to expire Sept. 14.
“We have a long history of negotiating fair contracts with both unions that reward our employees and support the long-term success of our business. Our goal this time will be no different,” GM CEO Mary Barra said Tuesday in a shareholder letter. “That’s the best possible outcome for all our key stakeholders, including our team, plant communities, dealers, suppliers and investors.”
A work stoppage would add to the auto industry’s yearslong production problems resulting from the coronavirus pandemic and significant supply chain constraints such as semiconductor chips.
During the last round of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and the UAW led to a national 40-day strike against GM. The automaker has said the strike cost it about $3.6 billion that year.
For GM specifically, a work stoppage could cost it hundreds of millions of dollars a week and delay the production ramp-up of its new electric vehicles, which the automaker has already been slow to produce. Jacobson said GM achieved North American production of 50,000 EVs during the first half of the year, however acknowledged “it’s been a little bit challenging.”
He said the automaker will disclose more about the slow production of its new EVs during an analyst call Tuesday.
Before reporting results Tuesday, GM’s earnings beat expectations 86% of the time, according to Bespoke. However, the stock only averages a 0.17% gain on earnings day.
Shares of GM are up roughly 16% this year. They closed Monday at $39.30 per share — off from a 52-week high of $43.63 per share, notched in February.
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https://www.barrons.com/articles/stock-market-movers-9cc9fac3
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A view of high-rise buildings is seen along the Suzhou Creek in Shanghai, China on July 5, 2023.
Ying Tang | NurPhoto | Getty Images
The Chinese economy could be facing a prolonged period of lower growth, a prospect which may have global ramifications after 45 years of rapid expansion and globalization.
The Chinese government is ramping up a host of measures aimed at boosting the economy, with a key Politburo meeting scheduled later this week to review the country’s first-half performance.
Chinese gross domestic product grew by 6.3% year-on-year in the second quarter, Beijing announced Monday, below market expectations for a 7.3% expansion after the world’s second-largest economy emerged from strict Covid-19 lockdown measures.
On a quarterly basis, economic output grew by 0.8%, slower than the 2.2% quarterly increase recorded in the first three months of the year. Meanwhile, youth unemployment hit a record high 21.3% in June. On a slightly more positive note, the pace of industrial production growth accelerated from 3.5% year-on-year in May to 4.4% in June, comfortably surpassing expectations.
The ruling Chinese Communist Party has set a growth target of 5% for 2023, lower than usual and notably modest for a country that has averaged 9% annual GDP growth since opening up its economy in 1978.
Over the past week, authorities announced a series of pledges targeted at specific sectors or designed to reassure private and foreign investors of a more favorable investment environment on the horizon.
However, these were largely broad measures lacking some major details, and the latest readout of the Politburo’s quarterly meeting on economic affairs struck a dovish tone but fell short of major new announcements.
Julian Evans-Pritchard, head of China economics at Capital Economics, said in a note Monday that the country’s leadership is “clearly concerned,” with the readout calling the economic trajectory “tortuous” and highlighting the “numerous challenges facing the economy.”
These include domestic demand, financial difficulties in key sectors such as property, and a bleak external environment. Evans-Pritchard noted that the latest readout mentions “risks” seven times, versus three times in the April readout, and that the leadership’s priority appears to be to expand domestic demand.
“All told, the Politburo meeting struck a dovish tone and made it clear the leadership feels more work needs to be done to get the recovery on track. This suggests that some further policy support will be rolled out over the coming months,” Evans-Pritchard said.
“But the absence of any major announcements or policy specifics does suggest a lack of urgency or that policymakers are struggling to come up with suitable measures to shore up growth. Either way, it’s not particularly reassuring for the near-term outlook.”
The Chinese economy is still suffering from the “triple shock” of Covid-19 and prolonged lockdown measures, its ailing property sector and a swathe of regulatory shifts associated with President Xi Jinping’s “common prosperity” vision, according to Rory Green, head of China and Asia research at TS Lombard.
As China is still within a year of reopening after the zero-Covid measures, much of the current weakness can still be attributed to that cycle, Green suggested, but he added that these could become entrenched without the appropriate policy response.
“There is a chance that if Beijing doesn’t step in, the cyclical part of the Covid cycle damage could align with some of the structural headwinds that China has — particularly around the size of the property sector, decoupling from global economy, demographics — and push China on to a much, much slower growth rate,” he told CNBC on Friday.
TS Lombard’s base case is for a stabilization of the Chinese economy late in 2023, but that the economy is entering a longer-term structural slowdown, albeit not yet a Japan-style “stagflation” scenario, and is likely to average closer to 4% annual GDP growth due to these structural headwinds.
Although the need for exposure to China will still be essential for international companies as it remains the largest consumer market in the world, Green said the slowdown could make it “slightly less enticing” and accelerate “decoupling” with the West in terms of investment flows and manufacturing.
For the global economy, however, the most immediate spillover of a Chinese slowdown will likely come in commodities and the industrial cycle, as China reconfigures its economy to reduce its reliance on a property sector that has been “absorbing and driving commodity prices.”
“Those days are gone. China is still going to invest a lot, but it’s going to be sort of more advanced manufacturing, tech hardware, like electric vehicles, solar panels, robotics, semiconductors, these types of areas,” Green said.
“The property driver — and with that, that pool of iron ore from Brazil and/or Australia and machines from Germany or appliances from all over the world — has gone, and China will be a much less important factor in the global industrial cycle.”
The recalibration of the economy away from property and toward more advanced manufacturing is evident in China’s massive push into electric vehicles, which led to the country overtaking Japan earlier this year as the world’s largest auto exporter.
“This shift from a complementary economy, where Beijing and Berlin kind of benefit from each other, to now being competitors is another big consequence of the structural slowdown,” Green said.
He noted that beyond the immediate loss of demand for commodities, China’s reaction to its shifting economic sands will also have “second order impacts” for the global economy.
“China is still making a lot of stuff, and they can’t consume it all at home. A lot of the stuff they’re making now is much higher quality and that will continue, especially as there’s less money going into real estate, and trillions of renminbi going into these advanced tech sectors,” Green said.
“And so the second order impact, it’s not just less demand for iron ore, it’s also much higher global competition across an array of advanced manufactured goods.”
Though it is not yet clear how Chinese households, the private sector and state-owned enterprises will look after the transition from a property and investment-driven model to one powered by advanced manufacturing, Green said the country is currently at a “pivotal point.”
“The political economy is changing, partly by design, but also partly by the fact that the property sector is effectively dead or if not dying, so they have to change and there’s emerging a new development model,” he said.
“It won’t just be a slower version of the China we had before Covid. It’s going to be a new version of the Chinese economy, which will also be slower, but it’s going to be one with new drivers and new kinds of idiosyncrasies.”
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Chevrolet Bolt at EPA’s National Fuel and Emissions Lab
How far an electric vehicle can drive on a single charge is one of the most closely watched numbers in the automotive world.
The official government process used to test and certify those ranges has potential flaws.
The U.S. Environmental Protection Agency has been testing vehicles since 1971, but only started testing EVs in 2012. EV technology is still quite new and is changing rapidly. EPA Engineers say these are exciting times, but it can also feel like the “wild west.”
The EPA only tests a small portion of the total vehicle fleet. The fact that it can test any vehicle at any time forces automakers to meet EPA standards.
Some in the auto industry say the EPA ratings are more accurate than those issued by other governmental bodies, at least for American roads. But independent groups have found that their own tests yield results that are different from official EPA range ratings.
Critics say the agency’s labels are inconsistent with those used for gas vehicles, in part because the tests don’t account for how people actually drive. Ranges on labels seem bigger than they are. Automakers can also use methods to inflate their range numbers.
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Tesla CEO Elon Musk and his security detail depart the company’s local office in Washington, January 27, 2023.
Jonathan Ernst | Reuters
Elon Musk‘s multiple ventures and the relationships between them are facing increased scrutiny as the Tesla CEO continues to add more to his plate.
During Tesla’s second-quarter earnings call on Wednesday, Truist analyst William Stein asked Musk about yet another tech venture he has started up and incorporated in Nevada: xAI. Musk recently said that the artificial intelligence startup aims to compete with Google Bard or OpenAI’s ChatGPT someday, and plans to collaborate with Tesla on software and silicon alike.
Stein asked him, “For investors that think there might be quite a bit of value in the AI features and products of Tesla, it might be concerning to see you pursuing another endeavor where AI is the focus. Can you talk about how xAI might overlap, might perhaps compete with Tesla or in other ways perhaps it enhances the value of what Tesla does?”
Musk claimed that xAI and its focus artificial general intelligence on would bring some value to Tesla, and talked about recruiting as an example.
“There were just some of the world’s best AI engineers and scientists that were willing to join a startup but they were not willing to join a large, sort of relatively established company like Tesla.” He added, “So I was like, OK well, better it’s a startup that I run than they go work somewhere else. That’s kind of the genesis of xAI.”
In addition to the xAI example, he said he was only able to entice a top materials science engineer away from his job at Apple by promising the engineer could work concurrently for SpaceX and Tesla. The engineer in question, Charles Kuehmann, joined Tesla in late 2015 and now holds the title of vice president of SpaceX and Tesla materials engineering, reporting directly to the CEO.
The issue of Musk and his multiple ventures also came up earlier this month, when Sen. Elizabeth Warren, D-Mass., urged the Securities and Exchange Commission to investigate its Twitter ties and related corporate governance issues.
Musk led a $44 billion buyout of the social media company last year and appointed himself CEO there temporarily. He is now the controlling shareholder, CTO and executive chair of Twitter while holding down the CEO role both at Tesla and at his aerospace and defense company, SpaceX. He’s also the founder and funder at the brain-computer interface startup Neuralink and tunneling venture The Boring Co.
Tesla is the only public company among the bunch. And it has never disclosed to shareholders exactly how much talent, time and money it has spent helping Musk at his other ventures, or why sending people over to Twitter would comprise a reasonable use of Tesla resources. Musk previously enlisted Tesla, SpaceX and The Boring Co. employees to assist him with his Twitter takeover, as CNBC reported.
At least one senior Tesla employee has jumped ship to Musk’s X Corp., the parent company of Twitter. Court filings revealed that Dhruv Batura, who had worked at Tesla since late 2013 and was a senior manager of business operations finance there, is now a senior director of finance at X Corp. Batura was posting job ads for X Corp. on Twitter on the day of Tesla’s second-quarter earnings report.
In a May 2023 proxy filing, Tesla did disclose a few details about its related party transactions. Among these, Tesla revealed that “Twitter is party to certain commercial and support agreements with Tesla. Under these agreements, Twitter incurred expenses of approximately $1.0 million in the aggregate in 2022 and $0.4 million in 2023 through February.” Tesla hasn’t said what, exactly, Twitter is buying from the company.
According to London School of Economics professor of organizational behavior, Randall S. Peterson, “Musk is making a convoluted argument in saying ‘I am helping Tesla by keeping these great people from joining a competitor.’ It’s a counter-factual you cannot ever really test or challenge in an investigation.”
Most startups fail, Peterson noted, and people who want to create startups were probably not likely to join Tesla’s direct competitors in the automotive industry.
Peterson said Musk’s many ventures can create risks for Tesla, and shareholders should seek more details.
“It’s hard to focus on and excel at any one thing when you run multiple companies,” Peterson said. “That’s a risk around the CEO himself. Would most companies’ shareholders tolerate their CEO running several other companies at the same time? The answer to that is probably no. So that raises a question of what the Tesla board is doing, whether they are independent at any level, or are so enamored of Musk that they not only tolerate his unusual way of working, but might be missing significant fundamental problems as long as the money keeps coming.”
Boards at companies that have ended up in crisis, like Enron and the Royal Bank of Scotland, failed to rein in their CEOs despite signs of problems for many quarters, he noted.
Another risk, Peterson said, is that Musk’s employees may feel pressure to work on many projects at once for him concurrently, outside of Tesla. In a quest to please him or rack up new work experience, employees may fail to recuperate from their work and burnout. Burnout, he said, can lead to high attrition or poor performance.
Finally, the professor noted, Musk may be creating distractions that impede focus among his employees, even if his intention is to cross-pollinate among his businesses.
“You need to be super-focused to be the best at something, both as an individual and as a corporation. That’s the reason we have seen a trend away from conglomerates which were big in the 70s to companies that are more focused today,” the professor said.
Still, Musk appears to be doubling down on unapologetic collaborations between companies in his growing empire.
On Wednesday’s call, he was asked to give an update on Tesla’s progress developing a humanoid robot dubbed Optimus. Musk waxed on in a futuristic vein, saying that Tesla may one day collaborate with Neuralink to make robotic, prosthetic arms and legs to help amputees return to full mobility or dexterity.
Tesla did not immediately respond for a request for comment. Twitter responded with an automated reply containing a crude symbol.
— CNBC’s Rohan Goswami contributed reporting.
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Chief Executive Officer of SpaceX and Tesla and owner of Twitter, Elon Musk attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre on June 16, 2023 in Paris, France.
Chesnot | Getty Images
Tesla reported earnings after the bell, showing a record for quarterly revenue but lower margins thanks to price cuts and incentives. The stock price is essentially unchanged in after-hours trading.
Net income (GAAP) was $2.70 billion, an increase of 20% from last year. Operating income, however, was off 3% from the year-ago quarter at $2.40 billion.
By way of comparison, during the first quarter of 2023, Tesla reported net income of $2.51 billion on revenue of $23.33 billion. During the second quarter last year, Tesla reported net income of $2.27 billion on $16.93 billion in revenue.
On the company’s earnings call, CEO Elon Musk said, “We continue to target 1.8 million vehicle deliveries this year, but expect Q3 production will be a little bit down because we’ve got summer shutdowns for a lot of factory upgrades.”
Early this month, Tesla reported 466,140 total vehicle deliveries for the second quarter and said it had produced 479,700 electric vehicles. Deliveries are the closest approximation of sales that Tesla reports.
Those deliveries were higher than Wall Street expected, and were partly driven by incentives and discounts. Correspondingly, operating margins came in at 9.6%, the lowest for at least the last five quarters. Total gross margin came in at 18.2%, also a low for the same period.
Tesla explained in a shareholder deck that its lower margins in the second quarter 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 from Tesla’s 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’s “services and other” revenue, including fees for out-of-warranty vehicle repairs, rose 47% to $2.15 billion.
Tesla’s research and development costs rose to $943 million (from $771 million in the first quarter) with the company writing in a shareholder deck that it is focused on “being at the forefront of AI development,” and has started production of its Dojo “training computers.”
Tesla’s crossover, the Model Y, became the best-selling vehicle worldwide in the first quarter of 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. The news could disappoint fans who are eagerly awaiting start of deliveries of the angular, sci-fi inspired pickup that Elon Musk first promoted in 2019. In recent days, Tesla posted a photo via its social media account on Twitter showing factory workers crowded in around a Cybertruck in their Austin, Texas facility. The tweet said, “First Cybertruck built at Giga Texas!”
On the earnings call, Musk that the Cybertruck would include lots of “new technology,” with 10,000 “unique parts and processes.” Giving the caveat that it is “always difficult to predict the ramp initially,” Tesla will be making the Cybertruck, “in high volume next year, and we will be delivering the car this year.”
Musk also said Tesla will be spending more than $1 billion on Dojo over the next year. Dojo is a supercomputer that Tesla is developing for AI machine learning and computer vision training purposes. Tesla hoovers up video clips and data from its customers’ and company vehicles to improve existing software, and to develop new features that become part of its driver assistance systems.
“You see a lot of AI companies doing you know LLMs and what not and I’m thinking, if they’re so great why can’t they make a self-driving car? Because it’s harder!”
Musk has been promising Tesla would deliver a self-driving car since at least 2016, and at that time promised a Tesla would be able to complete a cross-country trip with no driver intervention in 2017. So far, that still hasn’t happened. The company’s driver assistance systems, marketed as Autopilot or Full Self-Driving capability in the US, requires a human driver ready to steer or brake at any time.
More futuristically, Musk spoke about combining a Neuralink brain implant with a robotic arm or leg made by Tesla. Speaking of amputees, he said, “We believe we can give [them] a cyborg body that is incredibly capable — six-million-dollar man in real life, but it won’t cost six million dollars.” He joked, “Sixteen-thousand-dollar man.”
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Tesla CEO Elon Musk said on Friday that he plans for his newest venture, the artificial intelligence startup xAI, to collaborate with the automaker both on the “silicon front” and on the “AI software front.”
Musk also said, during Friday’s live audio session on Twitter Spaces, that xAI will use Twitter data for training the “maximally curious” artificial intelligence systems and products he hopes to build there. Musk did not specify whether and how much Twitter will charge xAI or his other companies for its data.
When Musk led a buyout of the social media venture in October 2022, Twitter took on $13 billion in new debt. The company has struggled to juice its subscription revenue, and has been sued by ex-employees and vendors for non-payment for completed work or severance.
Several of the other companies where Musk was a founder or serves as CEO, including Tesla, SpaceX and The Boring Co., have done business together for years. Some of their transactions have been disclosed in Tesla financial filings with the U.S. Securities and Exchange Commission.
On Friday, without citing evidence, Musk alleged that “Every AI organization on Earth” had used Twitter’s data for training, “in all cases illegally.” It was not clear which laws would have been violated by others’ data scraping. Earlier this month, Twitter sued four unknown parties for data scraping in Texas.
Twitter implemented rate limits on the social media platform in recent weeks because, Musk claimed, it was “being scraped like crazy.” He said, “We had multiple entities scraping every tweet ever made, and trying to do so in like, basically a span of days. So — this was bringing the system to its knees. So we had to take action.” He apologized for the inconvenience of the rate limiting.
In light of widespread use of Twitter data by AI software developers, Musk said, “I guess we will use the public tweets — obviously not anything private — for training as well, just like basically everyone else has.”
Twitter’s data set appeals for “text training,” and “image and video training,” Musk said. However, he specified that AI systems need more than human-created data and he was hoping that xAI could follow in the footsteps of Alphabet-owned DeepMind’s Alpha Zero, a computer program that achieved a masterful level of play in three games, chess, shogi and go, after training by playing these games against itself.
A Tesla fan and promoter, Omar Qazi (known as Whole Mars Catalog on Twitter) asked Musk a few questions about how he plans for xAI to work with Tesla during the Spaces event. Among other things, he asked whether xAI would potentially use Nvidia- or Tesla-made silicon for data processing.
Musk said, “That’s sort of a Tesla question. Tesla is building custom silicon. I wouldn’t call anything that Tesla’s producing a ‘GPU’ although one can characterize it in GPU equivalents.” He then spoke about Tesla’s in-vehicle hardware, which enables the company’s advanced driver assistance systems to work in its cars. The systems are marketed as Autopilot and Full Self Driving capability in the US.
Tesla has been promising fans a robotaxi, or self-driving vehicle, for years. At that time, Musk said a cross-country demo with a Tesla car would be possible without a single human intervention by the end of 2017. In 2019, Tesla raised billions of dollars with the promise of a million robotaxi-ready Tesla vehicles on the road in a year. So far, none of Tesla’s vehicles are capable of operating without a human driver ready to steer or brake at any time.
Musk said on Twitter Spaces on Friday that Tesla’s hardware 4, which is shipping in now, is “three-to-five times more capable than hardware 3,” and promised “hardware 5” would come along in a few years and would be “four or five times more capable” than its current version.
The CEO also discussed Dojo, a supercomputer Tesla is developing for AI machine learning and computer vision training purposes. Tesla uses video clips and data from its customers’ vehicles to improve existing software, or develop new features.
Musk said that the eventual AI language model that xAI will presumably develop won’t be “politically correct.” The CEO, who has repeatedly attacked “woke” or progressive values, said “I think our AI can give answers that people may find controversial even though they are actually true.”
The Tesla CEO said that xAI will need to develop technology that “understands the physical world and not just the Internet,” and he thinks that Tesla’s driving data will help it on that front.
Walter Isaacson, the author of an Elon Musk biography coming out later this year, asked Musk about Optimus, a humanoid robot Tesla is developing with the aim of using it in manufacturing. Musk said that the robot is still in its “early stages” and his team needs to find a way that users will be able to easily turn it off.
Tesla showed off a design for a humanoid robot called Optimus at its AI day in September 2022. Tesla executive are expected to share updates on this and more on an earnings call next Wednesday.
— CNBC’s Jonathan Vanian contributed reporting.
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