Sign up now for FREE unlimited access to Reuters.com Register July 20 (Reuters) – Tesla Inc ( TSLA.O ) on Wednesday reported a smaller-than-expected drop in quarterly profit as a series of price increases on its electric vehicles (EVs) helped offset production challenges caused by lockdowns due to COVID-19 China. Chief Financial Officer Zachary Kirkhorn said Tesla was still pushing to reach 50% delivery growth this year, adding that while the target has become more difficult, it “remains possible with strong execution.” Chief Executive Elon Musk has said he expects inflation to start easing by the end of 2022 and prices for most commodities to stabilize. Sign up now for FREE unlimited access to Reuters.com Register Tesla doesn’t have a demand problem, but a production problem, Musk said on a conference call. He dismissed the idea that global economic problems are hurting interest in Tesla, despite vehicle prices rising to what he called “embarrassing levels.” The US price of Tesla’s long-range Model Y, now $65,990, is up more than 30% since the start of 2021. Tesla shares rose about 1% in after-hours trading. Shares are down about 40% from their November high. Tesla’s China factory closed the second quarter with a record monthly production level. Musk said new factories in Berlin and Texas aim to produce 5,000 cars a week by the end of the year, adding that Berlin produced 1,000 cars a week in June. Musk previously said the new factories were “giant money machines” and that he had “a very bad feeling about the economy.” read more Morgan Stanley analysts said in a report after Tesla’s earnings call that they see “short-term headwinds to margins due to (new) challenges with ramping up new production, particularly in Berlin.” Tesla executives acknowledged some continued tightness in supplies of older-generation microchips, but said there were no significant issues in chip and battery supplies barring unforeseen COVID-related outages. The EV maker posted adjusted earnings of $2.27 per share for the quarter, compared to analysts’ consensus estimates of $1.81. That was down from $3.22 in the previous quarter. Its auto gross margin fell to 27.9 percent, lower than a year ago and the previous quarter, amid inflationary pressures. Tesla’s total revenue fell to $16.93 billion in the second quarter from $18.76 billion a quarter earlier, ending its record revenue streak in recent quarters. Analysts had expected revenue of $17.10 billion, according to IBES data from Refinitiv. read more
BITCOIN IN CASH
Tesla said it had converted about 75% of its bitcoin purchases to the fiat currency, which added $936 million in cash to its balance sheet. Musk said the sale was made to increase liquidity when Tesla was unsure how long China’s COVID lockdown would continue. Tesla has not sold any of its holdings in the Dogecoin cryptocurrency. “This should not be taken as a verdict on bitcoin,” he said, adding that Tesla is open to increasing its cryptocurrency holdings in the future. Musk had said in May last year that Tesla would not sell its bitcoin. “Bitcoin losses point to an important part of Tesla’s investment case – its eccentric owner. While Musk’s impressive innovation has served the company well, his personality is starting to raise governance questions,” said Laura Hoy, analyst at Hargreaves Lansdowne. Sign up now for FREE unlimited access to Reuters.com Register Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bengaluru. Editing by Anil D’Silva, Peter Henderson, Matthew Lewis, Leslie Adler and Himani Sarkar Our Standards: The Thomson Reuters Trust Principles.
