Investors were watching Tesla (NASDAQ:TSLA) closely this week. The company reported its second-quarter results following a 500% run-up in its share price over the past 12 months. There was a high bar going into the earnings release.

While the electric-car maker's results initially impressed investors, sending the stock higher in after-hours trading on Wednesday, shares tumbled by the end of the week. The growth stock was overdue for a breather.

As investors digest the earnings report, which featured the company's fourth consecutive quarter of profitability, here's a look at some of the most important takeaways from Tesla's second-quarter earnings call.

The interior of a Model 3. Image source: Tesla

Model 3. Image source: Tesla.

1. Tesla's cash position is improving

Tesla CFO Zachary Kirkhorn pointed out that the company's cash position was improving, moving Tesla further away from the high-risk balance sheet it used to sport.

"On cash flows, our cash balance increased to our highest level yet of $8.6 billion, which included free cash flows of over $400 million," explained Kirkhorn. The CFO went on to note that this occurred even as the company increased capital expenses to invest in its new factories in Shanghai and Berlin.

2. Autonomous driving is Tesla's biggest opportunity

A large portion of Tesla's earnings call was spent discussing the company's efforts to achieve full self-driving (FSD) capability. "FSD remains, by far and away, the biggest opportunity in the near term," Kirkhorn said. "Depending upon how you calculate, [the opportunity] is probably worth at least $100,000 per car," Musk added later in the call.

Tesla's vehicle software that currently enables the company's driver-assist capability has improved over time. Most recently, Tesla released an update for its vehicles to see traffic lights and stop signs and to respond accordingly. Eventually, Tesla believes it can enable a self-driving capability that will be safer than human driving -- and it plans to do this with an over-the-air software update. Of course, Tesla says that even if it can pull this off, the rollout will be limited by regulatory approval and can vary from one jurisdiction to another.

3. Tesla's competitive advantage

There was a time when manufacturing seemed to be Tesla's weakness. Manufacturing issues plagued the initial production ramp ups of Model S, Model X, and Model 3. But the launch of Tesla's Model 3 at its new factory in China and the company's new Model Y at its California factory have not only gone smoothly, but are also happening at faster paces than previous launches.

"It's a better factory for less money in less time," Musk said about its improved efficiency at building car factories and new production lines.

The CEO went as far as to say that he believes manufacturing will become the company's competitive advantage. "So the long-term sustainable advantage of Tesla, I think, will be manufacturing."

4. Big hopes for Tesla Energy

It's easy to overlook Tesla's energy generation and storage business (called Tesla Energy), which accounted for just 6% of total revenue in Q2. But Musk has big hopes for the business. "I think long term, Tesla Energy will be roughly the same size as Tesla Automotive," he said.

5. Demand is robust

Finally, Tesla once again refuted concerns about whether demand is becoming a limiting factor for the company's vehicle sales. But Musk emphasized that it wasn't demand that could limit deliveries to the company's target of 500,000 units this year (up from 368,000 in 2019), but production. "Demand is not a problem, definitely not," he said.

Since the launch of Tesla's Model S in 2012, critics have often said that Tesla overestimates the demand for its products. Yet annual deliveries over the past five years have increased approximately tenfold.