A Tesla logo is seen in Los Angeles, California, USA, January 12, 2018. REUTERS / Lucy Nicholson
Register now for FREE and unlimited access to Reuters.com
Sign up
July 20 (Reuters) – Tesla Inc. (TSLA.O) reported a smaller-than-expected quarterly profit drop on Wednesday as a series of price increases for its electric vehicles (EVs) helped offset production challenges caused by COVID-19 blockades in China.
Chief Financial Officer Zachary Kirkhorn said Tesla was still pushing for 50% growth in deliveries this year, adding that while the goal had become more difficult, “it’s possible with solid execution. “.
Chief Executive Elon Musk said he expects inflation to begin to decline by the end of 2022 and most commodity prices to stabilize.
Register now for FREE and unlimited access to Reuters.com
Sign up
Tesla has not a demand problem, but a production problem, Musk said at a conference. He rejected the idea that global economic problems were hurting interest in Tesla, despite rising vehicle prices to what he called “embarrassing levels.”
The US price of the long-range version of the Tesla Model Y, now $ 65,990, has risen more than 30% since early 2021.
Tesla shares rose about 1% in overtime trading. Shares are down 40% from November high.
Tesla’s factory in China ended the second quarter with a record monthly production level. Musk said the new factories in Berlin and Texas were expected to produce 5,000 cars a week by the end of the year, adding that Berlin produced 1,000 cars a week in June.
Musk had previously said the new factories were “giant money kilns” and that he had “a very bad feeling about the economy.” Read more
Morgan Stanley analysts said in a report after Tesla’s earnings announcement that they see “short-term headwinds due to (new) challenges with rising new production, especially in Berlin.” .
Tesla executives acknowledged some continued restrictions on the supply of older generation microchips, but said there were no major problems in the supply of chips and batteries except for unforeseen shutdowns related to COVID.
The EV maker posted an adjusted profit of $ 2.27 per share during the quarter against analysts ’consensus estimates of $ 1.81. That was down from $ 3.22 the previous quarter.
Its gross automotive margin fell to 27.9%, less than the previous year and the previous quarter, amid inflationary pressure.
Tesla’s total revenue fell to $ 16.9 billion in the second quarter from $ 18.76 billion in the previous quarter, ending its record revenue streak in recent quarters.
Analysts had expected revenue of $ 17.1 billion, according to Refinitiv’s IBES data. Read more
CASH BITCOIN
Tesla said it had converted approximately 75% of its bitcoin purchases into fiat currency, which added $ 936 million in cash to its balance sheet.
Musk said the sale was made to increase liquidity when Tesla was unsure of how long the COVID blockade would continue in China. Tesla has not sold any of its shares in the Dogecoin cryptocurrency.
“This should not be taken as a verdict on bitcoin,” he said, adding that Tesla was open to increasing its cryptocurrency holdings in the future.
Musk had said in May last year that Tesla would not sell its bitcoin.
“Bitcoins losses point to an important part of Tesla’s investment case: its eccentric owner. While Musk’s impressive innovation has served the company well, his personal style is beginning to raise issues of governance,” he said. said Laura Hoy, an analyst at Hargreaves Lansdown.
Register now for FREE and unlimited access to Reuters.com
Sign up
Report by Hyunjoo Jin in San Francisco and Nivedita Balu in Bangalore; Editing by Anil D’Silva, Peter Henderson, Matthew Lewis, Leslie Adler and Himani Sarkar
Our standards: the principles of trust of Thomson Reuters.