Tesla’s profits rise despite disappointing revenue, factory shutdown

TechnologyTesla's profits rise despite disappointing revenue, factory shutdown


Tesla on Wednesday reported a higher-than-expected quarterly profit as a string of price increases on its best-selling electric vehicles helped offset production challenges caused by COVID-19 lockdowns in China.

The company promised a “record-breaking second half” to the year and reiterated its goal of 50% average annual growth in vehicle deliveries over a multi-year horizon, but did not give specific targets for 2022 deliveries in results materials.

Chief Executive Elon Musk on a conference call said the company did not have a demand problem, dismissing the idea that global economic problems had an effect on interest in Teslas.

Shares of Tesla were up about 1% in after-hours trade. The shares are down about 40% since their peak in November.

“We are prepared for near-term margin headwinds due to (new) challenges with ramping new production, particularly in Berlin,” Morgan Stanley said in a report after the earnings announcement.

Total revenue fell to $16.93 billion in the second quarter.
AFP via Getty Images

Tesla said it has converted approximately 75% of its bitcoin purchases into fiat currency, which added $936 million of cash to its balance sheet.

Tesla has raised prices of its cars several times this year to cope with higher costs of lithium used in batteries and aluminum used for the body, along with other raw materials.

Musk has, however, said Tesla would drop prices when inflation cools.

Total revenue fell to $16.93 billion in the second quarter from $18.76 billion a year earlier, ending its streak of posting record revenue in recent quarters, as it struggled to meet demand for its electric cars due to a shutdown of its Shanghai factory and production challenges at new plants.

Analysts were expecting revenue of $17.10 billion, according to IBES data from Refinitiv.

Net income was $2.26 billion for the latest quarter, or $1.95 per share, compared with $1.14 billion, or $1.02 per share, a year earlier.

Tesla car
Tesla has raised prices of its cars several times this year to cope with higher costs of lithium used in batteries.
dpa/picture alliance via Getty I

Tesla is bracing for a potential recession and mounting competition from rivals. It also faces challenges of significantly boosting production in the second half, after China’s lockdowns hit production of the company and its suppliers.

Musk also has said Tesla’s new factories in Texas and Berlin were struggling to boost production, calling them “gigantic money furnaces” which are losing billions of dollars.

Musk said he had “a super bad feeling about the economy” in June and began layoffs.



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