Tesla tops profit forecast on widening margins


Profit more than tripled to US$1.45 (RM6.13) a share on an adjusted basis, swelling as vehicle sales rebounded from pandemic shutdowns last year, the Palo Alto, California-based automaker said. That beat the US$0.97 (RM4.10) average of analysts’ estimates and marked the eighth straight quarter of profit for Tesla.(File pic shows a Tesla 3 electric car.)

CALIFORNIA: Tesla Inc reported better-than-expected second-quarter earnings, as strong sales of its electric vehicles (EVs) fattened margins and delivered US$1bil (RM4.22bil) in net income, a milestone for the 18-year-old company.

Profit more than tripled to US$1.45 (RM6.13) a share on an adjusted basis, swelling as vehicle sales rebounded from pandemic shutdowns last year, the Palo Alto, California-based automaker said. That beat the US$0.97 (RM4.10) average of analysts’ estimates and marked the eighth straight quarter of profit for Tesla.

Increased sales of the mass-market Y and Model 3 sedan delivered a fourfold increase in operating income, even as Tesla grappled with chip shortages and port congestion, and slogged through a costly ramp up of new S and X models that weighed on margins.

The company widened its margins from core auto operations to 25.8%, from 22% in the prior quarter and 18.7% a year earlier.

“It puts them down the path of being the best in class automotive company from a margin perspective,” analyst Ben Kallo of Robert W Baird said after the results were announced. “I don’t think anyone expected this big of a beat, but with a market cap of over US$600bil (RM2.54 trillion), it takes more to move the stock than it used to.”

Shares of Tesla rose as much as 3.2% in after market trading. They gained 2.2% at the close in New York.

“Our auto gross margin excluding credits has increased nearly 10 percentage points to our highest yet since the introduction of Model 3,” chief financial officer Zachary Kirkhorn said on a conference call with analysts. That was possible because Tesla has lowered the cost of making cars more than it has cut prices, he said.

While Tesla is still by far the world’s biggest automaker by market value, its shares have declined 6.8% this year even as the S&P 500 has reached new highs. More-established peers, such as General Motors Co and Ford Motor Co, have rallied as they have aggressively pushed into the nascent EV market.

More competition from rival EVs comes against a backdrop of supply-chain challenges from a global semiconductor shortage and higher commodity prices.

Chief executive officer Elon Musk said Tesla has had factory shutdowns due to parts shortages but was able to find substitute suppliers for some semiconductors. He warned the chip shortfall may crimp Tesla’s plans for boosting output.Chief executive officer Elon Musk said Tesla has had factory shutdowns due to parts shortages but was able to find substitute suppliers for some semiconductors. He warned the chip shortfall may crimp Tesla’s plans for boosting output.

Chief executive officer Elon Musk said Tesla has had factory shutdowns due to parts shortages but was able to find substitute suppliers for some semiconductors. He warned the chip shortfall may crimp Tesla’s plans for boosting output.

“The global chip shortage situation remains quite serious,” Musk said on the call. “It does seem like it’s getting better, but it’s hard to predict.”

Tesla’s second-quarter revenue almost doubled in the April through June period, beating analysts’ estimates. Income from the sale of regulatory credits – used by other automakers to offset greenhouse gas emissions – totalled US$354mil (RM1.5bil), down from US$518mil (RM2.19bil) in the first three months of the year. Tesla was profitable without the help of regulatory credit revenue, analysts noted.

Musk, who said he was speaking from the site of a new factory under construction in Austin, Texas, dropped a minor bombshell: going forward, he will no longer participate in all of Tesla’s quarterly earnings calls.

“Obviously, I’ll do the annual shareholder meeting but I think that going forward I will most likely not be on earnings calls unless there’s something really important that I need to say,” he said.

The company confirmed a forecast for 50% growth in deliveries “over a multi-year horizon,” but added, “in some years we may grow faster, which we expect to be the case in 2021.”

The automaker said it is “on track” to start output of its Model Y crossover in two new plants – the one in Austin, Texas, and another in Berlin – by year-end.

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Tesla pushed back the start date for its Semi Truck, first unveiled in 2017, yet again to next year.

Production of its highly anticipated Cybertruck pickup will follow the Model Y in Austin, but it didn’t provide further details.

“I don’t think anyone is surprised that the Semi is delayed and that the focus is on Model Y and Cybertruck,” analyst Gene Munster of Loup Ventures said in a phone interview Monday. ― Bloomberg

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