Tesla reported first-quarter net income more than seven times higher than a year ago
Tesla reported first-quarter net income more than seven times higher than a year ago
Tesla reported Wednesday that its first-quarter net income was more than seven times higher than 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 reported record sales of $3.32 billion from January through March. Excluding special items such as stock-based compensation, the Austin, Texas-based company earned $3.22 per share. That comfortably beat Wall Street’s estimate of $2.26 per share, according to data provider FactSet.
Revenue for the quarter was $18.76 billion, also beating estimates of $17.85 billion. It was boosted by several price hikes intended to offset rising costs for lithium, nickel, cobalt and other commodities.
It could be more difficult for Tesla to release similar numbers later this year. It faces costs from ramping up new factories in Germany and Texas, as well as rising commodity prices. Attention is also being paid to increased competition as startups and long-established automakers bring more electric models to market.
But CEO Elon Musk said in a conference call with analysts that waiting lists are long, even though Tesla has hiked prices to anticipate costs coming in the next six to 12 months. “We’re obviously not demand-limited, we’re production-limited,” he said.
Tesla has been spared many increases because of long-term contracts that have kept costs down, Mr Musk said, but those contracts are expiring. Some suppliers are targeting price increases of 20% to 30% from last year by the end of this year, he said.
“We hope we don’t have to raise prices any further,” Musk said.
Tesla’s cheapest car, the Model 3, now starts at nearly $47,000.
Tesla has also been able to control costs through manufacturing efficiencies and a new battery chemistry with higher energy density per cell, the company says.
The company said its weekly production for the quarter was strong, but a surge in COVID-19 cases prompted the temporary closure of its Shanghai factory, as well as part of Tesla’s supply chain.
Tesla seems to have handled the parts shortage better than the rest of the industry. Mr Musk said the Shanghai plant is now operational but has lost a few weeks of production. He still expects Tesla to build 1.5 million vehicles this year.
Shares of Tesla closed down nearly 5% at $977.20 on Wednesday but more than erased the day’s losses in extended trading after the company released its numbers. The stock is down about 7.5% so far this year.
Mr. Musk wasn’t asked about his hostile $43 billion bid to take over Twitter.
Despite China’s manufacturing and supply chain woes, Tesla reiterated its forecast of 50% compound annual growth in vehicle deliveries over the next few years. “The growth rate will depend on our equipment capacity, operational efficiencies, and supply chain capacity and stability,” the company said.
Though production has started at the Texas and German factories, Tesla said ramping up at both sites will take time. The company said its factories were running below capacity due to shortages of parts.
Tesla also expects to release the “Full Self-Driving” beta testing software to all US customers who have purchased the feature by the end of the year. Mr Musk said about 100,000 owners are currently testing the system on public roads. Tesla has said that despite the name, the cars cannot drive themselves and drivers must be alert and ready to intervene at any moment.
Tesla delivered a record 310,000 vehicles worldwide in the first quarter, up about 68% from the same period in 2021. 185,000 vehicles were delivered in the first quarter of last year.
Last year, the company delivered a record 936,000 vehicles, an 87% increase from 2020. The company announced in February that it expects annual sales growth of 50%, meaning about 1.4 million this year vehicles are delivered.
