Tesla Q2 profits rise on price hikes

Tesla Q2 profits rise on price hikes

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

“With each of the Fremont and Shanghai factories achieving their highest-ever production months and new factory growth, we are focused on a record-breaking second half of 2022,” Tesla said in a statement Wednesday.

Tesla reiterated its goal to achieve 50 percent average annual growth in vehicle deliveries over a multi-year horizon, but did not give guidance on this year’s outlook with its latest presentation materials.

The EV maker posted an adjusted profit of $2.27 per share versus analysts’ consensus estimates of $1.81.

Its automotive gross margin fell to 27.9 percent, down from a year earlier and the preceding quarter, amid inflationary pressure.

The company has raised prices on its EVs 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.

Chief Executive Officer Elon Musk has, however, said Tesla would lower prices when inflation cools.

“Tesla’s solid quarter is the latest sign that it has done an outstanding job navigating through global supply chain and logistics challenges, weathering the storm better than most legacy automakers,” said Jesse Cohen, senior analyst at Investing.com

“Tesla’s improved manufacturing efficiency places it in a good position to produce more cars, putting it on track to break its deliveries target for the year,” he said.

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

Tesla said it has converted approximately 75 percent of its bitcoin purchases into fiat currency, which added $936 million of cash to its balance sheet. Tesla announced its investments in bitcoin early last year, and Musk said in May that Tesla will not be selling any bitcoin.

Total revenue fell to $16.93 billion in the second quarter from $18.76 billion a quarter 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.

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. Read full story

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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