Tesla earns seven times more than a year ago thanks to strong sales

DETROIT (AP) — Tesla on Wednesday reported its first-quarter net profit was more than seven times higher than a year ago, fueled by strong sales despite global supply chain issues and cutbacks of pandemic-related production 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-based company earned $3.22 per share. That was well above Wall Street estimates 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 multiple price hikes intended to offset rising costs for lithium, nickel, cobalt and other raw materials.

It may be harder for Tesla to post similar numbers later this year. It faces costs related to the ramp-up of new factories in Germany and Texas, as well as rising raw material prices. He also envisions increased competition as startups and traditional automakers roll out more electric models.

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But CEO Elon Musk said on a conference call with analysts that waiting lists are long even though Tesla has raised prices in anticipation of costs that will arise over the next six to 12 months. “We’re obviously not limited by demand, we’re limited by production,” he said.

Tesla has been spared many increases due to long-term contracts that cut costs, Musk said, but those contracts will expire. Some suppliers are asking for price increases of 20 to 30 percent over last year until the end of this year, he said.

“We hope we don’t need 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 new battery chemistry that has a higher energy density per cell, the company said.

The company said its weekly production for the quarter was strong, but a spike in COVID-19 cases caused the temporary shutdown of its Shanghai factory, as well as part of Tesla’s supply chain.

Tesla seems to have handled parts shortages better than the rest of the industry. Musk said the Shanghai factory is now operational but lost a few weeks of production. He still expects Tesla to build 1.5 million vehicles this year.

Shares of Tesla closed nearly 5% lower on Wednesday at $977.20, but more than regained the day’s losses in extended trading, after the company released its numbers. The stock is down about 7.5% since the start of the year.

Musk was not asked about his hostile $43 billion bid to take over Twitter.

Despite production and supply chain issues in China, Tesla reiterated its forecast of 50% average annual growth in vehicle deliveries over the next few years. “The rate of growth will depend on our equipment capacity, operational efficiency and supply chain capacity and stability,” the company said.

Although production has started at the Texas and German factories, Tesla said ramping up at both locations will take time. The company said its factories were below capacity due to parts supply shortages.

Tesla also says it expects “Full Self-Driving” beta testing software to be released to all US customers who have purchased the feature by the end of the year. Musk said about 100,000 owners are currently testing the system on public roads. Tesla said the cars cannot drive themselves, despite their name, and drivers should be careful and be ready to intervene at all times.

Tesla delivered a record 310,000 vehicles worldwide in the first quarter, up about 68% 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 2020 figures. The company said in February it expects 50% annual growth of its sales, meaning it expects around 1.4 million vehicles to be delivered this year.

About Natalee Broderick

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