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Tesla profit exceeds target; Musk sees no demand problem

Tesla profit exceeds target;  Musk sees no demand problem
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July 20 (Reuters) – Tesla Inc. (TSLA.O) reported a smaller-than-expected drop in quarterly profit on Wednesday as a series of price increases on its electric vehicles (EVs) helped offset production challenges caused by COVID-19 lockdowns in China. .

Chief Financial Officer Zachary Kirkhorn said Tesla was still pushing to hit 50% growth in deliveries this year, adding that while the goal had gotten harder, “it’s still possible with strong execution.”

Chief Executive Elon Musk has said he expects inflation to start to decline by the end of 2022 and most commodity prices to stabilize.

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Tesla does not have a demand problem, but rather a production problem, Musk said in a conference call. He dismissed the notion that global economic woes were dampening interest in Tesla, despite vehicle prices rising to what he called “embarrassing levels.”

The US price of the long-range version of Tesla’s Model Y, now $65,990, is up more than 30% since the start of 2021.

Tesla shares were up about 1% in after-hours trading. The shares are down 40% from their peak in November.

Tesla’s factory in China ended the second quarter with a record monthly production level. Musk said the new factories in Berlin and Texas aimed 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 that the new factories were “giant furnaces of money” and that he had “a bad feeling about the economy.” read more

Morgan Stanley analysts said in a report after Tesla’s earnings announcement that they see “near-term margin headwinds due to (further) challenges with rising new production, particularly in Berlin.”

Tesla executives acknowledged some continuing shortages in supply of older-generation microchips, but said there were no major issues in supply of chips and batteries, barring unforeseen COVID-related shutdowns.

A Tesla logo is seen in Los Angeles, California, U.S. January 12, 2018. REUTERS/Lucy Nicholson

The electric vehicle maker posted an adjusted profit of $2.27 per share for the quarter versus analyst consensus estimates of $1.81. This was down from $3.22 in the previous quarter.

Its auto gross margin fell to 27.9%, down from a year earlier and the previous quarter, amid inflationary pressure.

Tesla’s total revenue fell to $16.93 billion in the second quarter from $18.76 billion in the previous quarter, ending its streak of posting record revenue in recent quarters.

Analysts had expected revenue of $17.1 billion, according to IBES data from Refinitiv. read more

BITCOIN CASH

Tesla said it had converted about 75% of its bitcoin purchases into fiat currency, adding $936 million in cash to its balance sheet.

Musk said the sale was done to increase liquidity when Tesla was unsure how long China’s COVID lockdown would continue. Tesla has not sold any of its Dogecoin cryptocurrency holdings.

“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 of last year that Tesla would not sell his bitcoin.

“The bitcoin 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 governance questions,” Laura said. Today, Hargreaves Lansdown analyst.

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Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bangalore; Edited by Anil D’Silva, Peter Henderson, Matthew Lewis, Leslie Adler, and Himani Sarkar

Our standards: The Thomson Reuters Trust Principles.

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