SAN FRANCISCO (REUTERS) – Tesla on Wednesday (July 20) reported a higher-than-expected quarterly profit as a string of price increases on its best-selling electric vehicles (EVs) helped offset production challenges caused by Covid-19 lockdowns in China.
The company promised a “record-breaking second half” to the year and reiterated its goal of 50 per cent average annual growth in vehicle deliveries over a multi-year horizon, but did not give specific targets for 2022 deliveries in results materials.
Chief executive Elon Musk said on a conference call that the company did not have a demand problem, dismissing the idea that global economic problems had an effect on interest in Tesla vehicles.
Shares of Tesla were up about 1 per cent in after-hours trade. The shares have been down about 40 per cent since their peak in November.
Tesla’s China factory ended the second quarter with a record monthly production level, and the company said production continued to grow in Texas and that its new German factory saw strong production rate improvement towards the end of the quarter.
Still, Tesla did not give a detailed production outlook for its factories in Berlin and Texas, which Mr Musk had previously said were losing billions of dollars.
“We are prepared for near-term margin headwinds due to (new) challenges with ramping up new production, particularly in Berlin,” Morgan Stanley said in a report after the earnings announcement.
The EV maker posted an adjusted profit of US$2.27 per share versus analysts’ consensus estimates of US$1.81.
Its automotive gross margin fell to 27.9 per cent, down from a year earlier and the preceding quarter, amid inflationary pressure.
The company has raised prices of its cars several times this year to cope with higher costs of lithium used in batteries and aluminum used for vehicle bodies, along with other raw materials.
Mr Musk has said, however, that Tesla would drop prices when inflation cools.
“Tesla’s solid quarter is the latest sign that it has done an outstanding job navigating through global supply chain and logistics challenges, weathering the storm better than most legacy automakers,” said Investing.com senior analyst Jesse Cohen.
“Tesla’s improved manufacturing efficiency places it in a good position to produce more cars, putting it on track to break its deliveries target for the year,” he said.