Tesla posts record quarterly profit of $3.3 billion

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posted a sevenfold increase in first-quarter profits to a record high as Chief Executive Elon Musk said the company could ramp up vehicle production more than expected this year despite bottlenecks and supply chain disruptions supply in China.

Musk said Wednesday that Tesla will likely produce more than 1.5 million vehicles in 2022, up about 60% from last year. The company’s long-term goal is to increase vehicle deliveries by an average of 50% per year. Production in China would recover strongly, he said.

The world’s largest automaker by value is recovering from a shutdown at its Shanghai plant, where work was suspended on March 28 due to strict government measures intended to slow the spread of Covid-19. Tesla said it lost about a month of production due to the shutdown.

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“Shanghai is coming back with a vengeance,” Mr Musk said as the company said sales in the first three months of the year jumped around 80% from a year earlier to 18.76. billion, generating a record profit of $3.32 billion. This surpassed the previous high of $2.3 billion set in the previous quarter. The results exceeded Wall Street expectations for sales and earnings.

However, factories are expected to continue operating below capacity through 2022, largely due to supply chain bottlenecks, Tesla said.

Tesla delivered about 310,000 vehicles worldwide in the first quarter, down from 184,877 a year earlier and 308,650 in the fourth quarter.

Shares of Tesla closed nearly 5% on Wednesday, before rising more than 4% in late trading after the company reported quarterly results, which were supported by an uptick in revenue from regulatory credits.

The company sells the credits to rival automakers who need them to comply with emissions rules. Those sales brought in $679 million last quarter, helped by a one-time benefit, up from $518 million a year earlier. Credit sales have long been essential to Tesla’s bottom line, although they have declined in recent quarters. The company said it would become less dependent on them.

Mr Musk joined Tesla’s earnings call nearly a week after making a non-binding $43 billion bid to take over Twitter Inc.

The social media company adopted a so-called poison pill a day after Mr Musk made his offer. The move makes it harder for any investor to buy 15% or more of the company’s shares. Mr. Musk, on Tesla’s call, did not address the situation on Twitter.

In Shanghai, Tesla had about a week’s supply of vehicle parts at its factory and was working with local authorities and suppliers to resolve logistical issues, local government-run Shanghai TV reported.

Shanghai-area manufacturers have struggled to get parts delivered as travel restrictions imposed by China have made it difficult for trucks to enter the region, analysts said.

Tesla has raised the prices of its cars, likely helping to offset the cost of increased production at new factories such as Giga Texas near Austin, according to Bernstein Research.


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Customers, meanwhile, have to wait longer to get behind the wheel of a new Tesla. In March, U.S. buyers could expect to wait about eight months for a new long-range Model Y compact sport utility vehicle, one of Tesla’s most popular models, according to Bernstein Research. Delivery times have always been around two to eight weeks domestically, the company said.

Tesla has in recent weeks delivered its first Model Ys manufactured at its new factories in Germany and Texas. Mr. Musk said localizing production would improve Tesla’s economy in the long run.

The automaker charged more for its cars amid inflation and persistent supply chain bottlenecks. The cost of a Model Y configuration jumped 30% in the year ended March, according to Bernstein. Price increases in China have not been as extreme, ranging from 5% to 11% over the same period, depending on the model, according to Bernstein data.

In some cases, Musk said, suppliers are charging 20 to 30 percent more for parts than they did last year. “I think the official numbers actually underestimate the true extent of inflation,” Musk said.

Tesla signaled that software sales would become an increasingly important profit driver. By the end of the year, he said he expects an advanced driver assistance feature designed to help vehicles navigate cities to be available across the United States. who purchased Tesla’s “Full Self-Driving” package. Tesla has gradually released trial versions of the technology, which more than 100,000 people are testing, Musk said in a recent TED interview. The system, which costs $12,000 upfront, does not make the vehicles self-driving.

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Mr Musk on Wednesday provided additional details on the dedicated robotaxi he teased earlier this month, saying he hopes the vehicle, which will have no steering wheel or pedals, will enter volume production in 2024. He said a trip in such a vehicle would cost less than a bus ticket.

Tesla is working to open up the company’s fast-charging network in the United States to electric vehicles made by other manufacturers, senior vice president Andrew Baglino said. The company launched a pilot program last year that allows non-Tesla drivers in parts of Europe to use its charging network.

The company is also taking steps to allow more of its customers to insure their vehicles through Tesla. It aims to have 80% of U.S. customers have access to a Tesla insurance product by the end of the year, Chief Financial Officer Zachary Kirkhorn said.

The automaker, like many in the industry, is also facing soaring costs for the materials used in the rechargeable batteries that power electric vehicles. Raw materials make up 80% of the cost of a lithium-ion battery, up from 40% in 2015, according to Benchmark Mineral Intelligence, which tracks the battery supply chain.

Mr Musk, who tweeted earlier this month that lithium prices had “reached insane levels”, revisited the idea that Tesla might get into mining and refining the metal and urged others to do the same.

Tesla flirted with that prospect for years and even approached deals in the middle of the last decade to buy lithium mines in the United States and Argentina, according to a person familiar with the matter. But the company did not follow through on the acquisitions because it prioritized production of its Model 3 sedan, the person said. In the years since, the balance of power has shifted to suppliers as automakers from Ford Motor Co. and Volkswagen AG to newcomer Rivian Automotive Inc. scramble to get the materials they need. to achieve ambitious electric vehicle production targets. Ford and General Motors Co. are expected to report results next week. Rivian’s quarterly results are expected in May.

Lithium carbonate prices averaged around $60,800 per metric ton in March, up about $50,000 from a year earlier, according to benchmark data.

Write to Rebecca Elliott at [email protected]

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