Tesla reports net income seven times higher in the first quarter than a year ago
Tesla reports net income seven times higher in the first quarter than a year ago
Tesla reported Wednesday that its first-quarter net earnings were up seven times compared to a year ago, driven by strong sales despite global supply chain kinks and pandemic-related production cuts in China.
The electric vehicle and solar panel company made a record $3.32 billion from January to March. Excluding special items such as stock-based compensation, the Austin, Texas, company earned $3.22 per share. It beat Wall Street’s estimates by $2.26 per share, according to data provider FactSet.
Revenue for the quarter was $18.76 billion, which also beat estimates of $17.85 billion. This was fueled by several price increases to offset the rising costs of lithium, nickel, cobalt, and other raw materials.
It could be tough for Tesla to post similar numbers later this year. It is facing costs from new factories in Germany and Texas, as well as rising commodity prices. It is also seeing increased competition as startups and legacy automakers introduce more electric models.
But CEO Elon Musk said on a conference call with analysts that the waiting list is long, even as Tesla raised prices while anticipating the costs to come during the next six to 12 months. “We are obviously not limited demand, we are limited production,” he said.
Tesla has been shielded from several hikes because of longer-term contracts, which have reduced costs, but those contracts will expire, Mr. Musk said. He said some suppliers are demanding 20% to 30% price hike from last year by the end of this year.
“We hope we don’t need to increase pricing further,” Musk said.
Tesla’s lowest priced car, the Model 3, now starts at around $47,000.
Tesla is able to control costs with increased manufacturing capacity and a new battery chemistry that has a higher energy density per cell, the company has said.
The company said its weekly output for the quarter was strong, but a spike in COVID-19 cases led to the temporary closure of its factory in Shanghai as well as part of Tesla’s supply chain.
Tesla seems to have dealt with the parts shortage better than the rest of the industry. Mr Musk said the Shanghai plant is still operational, but has lost weeks of production. He still expects Tesla to make 1.5 million vehicles this year.
Tesla shares closed down nearly 5% on Wednesday at $977.20, but it more than made up for the day’s losses in extended trading, after the company released its numbers. The stock is down about 7.5% so far this year.
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Tesla reiterated its guidance of 50% annual average growth in vehicle deliveries over the next several years, despite Chinese production and supply chain problems. “The rate of growth will depend on our equipment capacity, operational efficiency and the efficiencies and stability of the supply chain,” the company said.
Although production has begun in Texas and German factories, Tesla said ramp up at both sites will take time. The company said its factories were running below capacity due to short supply of parts.
Tesla also says it expects “full self-driving” beta test software to be released to all US customers who purchased the feature by the end of the year. Mr Musk said there are now about 100,000 owners testing the system on public roads. Tesla has said that the cars themselves cannot drive, despite the name, and that drivers must pay attention and be prepared to intervene at all times.
Tesla delivered a record 310,000 vehicles worldwide in the first quarter, a nearly 68% increase from the same period in 2021. It delivered 185,000 vehicles in the first quarter of last year.
Last year the company delivered a record 936,000 vehicles, an 87% increase over the 2020 numbers. The company said in February that it expects a 50% annual growth in sales, meaning it expects to deliver around 1.4 million vehicles this year.