Tesla weathered production disruptions in China and high costs to expand new plants in Texas and Germany to post a 57 percent jump in adjusted earnings per share in the latest quarter.
The electric car maker’s second-quarter results brought some relief after the company warned of production and supply strains. Revenue of $16.9 billion was up 42% from a year earlier, though the figure was slightly below Wall Street’s $17.1 billion estimate.
Tesla also revealed that it had largely reversed last year’s controversial $1.5 billion bet on bitcoin as it converted three-quarters of its stake into fiat currencies amid falling cryptocurrency prices.
CEO Elon Musk’s enthusiasm for cryptocurrencies meant the carmaker was one of the first companies to park some of its cash in digital assets.
Musk warned in an internal email last month that he had a “super bad feeling” about the economy.
Asked Wednesday if demand was weakening, the Tesla chief said “somewhat, maybe,” but added, “We have so much excess demand that it’s not a problem for us.” Chief Financial Officer Zach Kirkhorn said the drop in demand was “ immaterial’.
Instead, Musk said that “Tesla’s problem is primarily one of production.”
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Pressure on the supply chain and Covid-19-related shutdowns in Shanghai left the company needing about 935,000 vehicle deliveries in the second half of the year to reach the 1.5 million total that many analysts had hoped for, or an increase of 70 percent compared to the same period in 2021.
Musk did not give a production forecast for the rest of the year, other than to say the company is likely to achieve “record” output. He also said Tesla’s plans call for it to reach full production by the end of the year, at an annual rate of 2 million vehicles.
Tesla revealed that production shutdowns in Shanghai and parts shortages wiped out up to a quarter of vehicle deliveries in the three months ended June 30. While the figure of 254,695 vehicles it shipped was still up 27% from a year earlier, it represented the first consecutive quarterly decline in more than two years.
Spending on new manufacturing facilities pushed Tesla’s closely watched gross profit margin from automotive operations down to 27.9 percent, down from a record 32.9 percent margin reported in the first quarter.
Musk said that Tesla’s crypto sales “shouldn’t be taken as some kind of judgment on Bitcoin” and that they were done to maximize the company’s cash position in the face of uncertainty about China’s Covid-related shutdowns. Tesla is “certainly open to increasing its bitcoin holdings in the future” and has not sold any of its dogecoin, he added.
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Bitcoin’s price has roughly halved since late last year, when Tesla valued its stake at just under $2 billion. It said recent sales raised $936 million and that it took a $106 million impairment charge on top of the $101 million charge it took last year.
Before the results were released, Tesla’s share price had fallen 36 percent since Musk first revealed he had amassed a significant stake in Twitter. The Twitter stake has raised concerns about whether his involvement in the social media company will lead to the sale of part of his Tesla holding. The tech-heavy Nasdaq Composite fell 13 percent over the same period.
Tesla shares initially jumped more than 4% after Wednesday’s results, but pared their advance to 0.5%.
For the second quarter, Tesla reported adjusted earnings per share of $2.27, up from $1.45 a year earlier. On a pro forma basis, earnings per share rose to $1.95 from $1.02.
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