Tesla quarterly profit tops US$1 billion for 1st time

The fast-growing automaker led by Elon Musk delivered more than 200,000 vehicles in the period, also a record.
The fast-growing automaker led by Elon Musk delivered more than 200,000 vehicles in the period, also a record.PHOTO: REUTERS

NEW YORK (AFP, REUTERS) - United States electric carmaker Tesla reported its first-ever quarterly profit above US$1 billion (S$1.36 billion) on Monday (July 26) as it reiterated its 2021 production targets despite supply chain upheaval.

Profit surged to US$1.1 billion in the quarter ending June 30, up from US$104 million in the year-ago period as revenues nearly doubled to US$12 billion.

The fast-growing carmaker led by billionaire Elon Musk delivered more than 200,000 vehicles in the period, also a record.

In reiterating its forecast for the year, the company said: "Over a multi-year horizon, we expect to achieve 50 per cent average annual growth in vehicle deliveries. In some years we may grow faster, which we expect to be the case in 2021."

The language is identical to that in the prior quarter, although Tesla alluded elsewhere in the press release to supply chain problems.

These include the global semiconductor shortage that has forced General Motors, Ford and other manufacturers to trim production.

"With global vehicle demand at record levels, component supply will have a strong influence on the rate of our delivery growth for the rest of this year," Tesla said.

Mr Musk in an earnings call said the global chip shortage that led to temporary factory shutdowns remains serious.

For the first time since late 2019, Tesla profits did not rely on sales of environmental credits to other automakers, a sign of increasing financial health for the manufacturing operation.

“Tesla impressed with its numbers, as most of its revenue came from vehicle sales,” said Investing.com senior analyst Jesse Cohen.

Shares of the world’s most valuable automaker rose as much as 3.2 per cent to US$678.40 in after-market trading on Monday.

In a call with investors and analysts, Tesla executives said that volume production growth for this year will depend on parts availability, as it aims to grow deliveries by more than 50 per cent.

Mr Musk said Tesla has “many calls at midnight, 1am, just with suppliers about resolving a lot of the shortages”.

While some people had suggested Tesla build its own chip fab, he pointed to the long lead time. “That would take us, even moving like lightning, 12 to 18 months,” he said.

Still, Mr Musk said Tesla expects to start limited production this year of the Model Y sport utility vehicle at factories under construction in Texas and Germany.

Tesla said it has delayed the launch of its Semi truck programme to next year to focus on starting factories and due to limited availability of battery cells and other parts this year.

Mr Musk did not give a timeframe for when Tesla will start mass production of its new-generation batteries and its much-anticipated Cybertruck.

“It is difficult to say when the last of the technical challenges will be solved,” he said, referring to its 4680 battery cells.

He said Tesla has a backup plan of using its existing 2170 batteries, adding that its battery cell suppliers would double production next year.

The carmaker said revenue jumped to US$11.96 billion from US$6.04 billion a year earlier, when its California factory was shut down for more than six weeks due to local lockdown orders to fight the pandemic.

Analysts had expected revenue of about US$11.3 billion, according to IBES data from Refinitiv.

Excluding items, Tesla posted a profit of US$1.45 per share, easily topping analyst expectations for a profit of 98 US cents per share.

Tesla said operating income rose with volume growth and cost reduction, which offset higher supply chain costs, lower regulatory credit revenue and other items, including US$23 million in losses on investment in cryptocurrency Bitcoin.

In an aside, Mr Musk said he “most likely will not be on earnings calls” going forward to discuss financial results with investors and analysts. These calls have been a colourful quarterly ritual Mr Musk has used for discourses on Tesla technology, or to fire back at rivals or critics.