Tesla’s quarterly earnings beat estimates; sells most of its bitcoin

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

July 20 (Reuters) – Tesla Inc ( TSLA.O ) reported a higher-than-expected quarterly profit on Wednesday as a series of price hikes on its best-selling electric vehicles helped offset production challenges caused by COVID-19 shutdowns in China.

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

Tesla reiterated its goal of achieving 50% average annual growth in vehicle deliveries over a multi-year horizon, but did not provide guidance on this year’s outlook in the presentation material.

The electric car maker posted adjusted earnings of $2.27 per share against analysts’ consensus estimates of $1.81.

The gross margin for the automotive industry fell to 27.9%, down from the previous year and the previous quarter, amid inflationary pressures.

The company has raised the prices of its cars several times this year to cope with higher costs for lithium used in batteries and aluminum used for the body, along with other raw materials.

However, CEO Elon Musk has said that Tesla will lower prices when inflation cools.

“Tesla’s solid quarter is the latest sign that it has done an outstanding job of navigating 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 puts it in a good position to produce more cars, putting it on track to break its delivery target for the year,” he said.

Shares of Tesla rose around 1% in after-hours trading. The shares are down around 40% since the peak in November.

BITCOIN

Tesla said it has converted about 75% of its bitcoin purchases into fiat currency, adding $936 million in cash to its balance sheet. Tesla announced its investments in bitcoin early last year, and Musk said in May that Tesla will not sell any bitcoin.

Total revenue fell to $16.93 billion in the second quarter from $18.76 billion a quarter earlier, ending a streak of record earnings in recent quarters as it struggled to meet demand for its electric cars due to a factory shutdown in Shanghai and production challenges at new plants.

Analysts expected revenue of $17.10 billion, according to IBES data from Refinitiv.

Tesla is preparing for a potential recession and increasing competition from rivals. It also faces challenges in ramping up production significantly in the second half of the year, after China’s shutdowns hit the production of the company and its suppliers. read more

Musk has also said that Tesla’s new factories in Texas and Berlin were struggling to increase production, calling them “giant money furnaces” that are losing billions of dollars.

Musk said he had a “super bad feeling about the economy” in June and began laying off. read more

Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bengaluru Editing by Anil D’Silva, Peter Henderson and Matthew Lewis

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