Tesla posts record profit, but warns supply chain challenges could persist through 2022

April 21, 2022 0 Comments

US electric-car giant Tesla reported first-quarter earnings after the market closed on Wednesday, beating analysts’ expectations.

Revenue in the first three months had jumped roughly 80% from a year earlier to $18.76 billion, generating a record profit of $3.32 billion. Estimated revenue is $17.92 billion. 

Automotive revenue totaled $16.86 billion, an increase of 87% over the same period last year. Automotive gross margins increased to 32.9% with Tesla posting a $5.54 billion profit in its main segment. 

For the quarter, regulatory credits accounted for $679 million in automotive revenue. Tesla sells the credits to automakers who can’t make enough low- or zero-emission vehicles to satisfy environmental regulations.

The company said in its shareholder report that revenue growth was partly due to an increase in the number of cars delivered by Tesla and a rise in average sales prices.

Earlier this month, Tesla reported first-quarter deliveries of 310,048 vehicles, with Model 3 and Model Y vehicles accounting for 95% of deliveries, or 295,324. 

The company said that inflation has resulted in high prices for some raw materials, forcing it to adjust product pricing.

While the company had a stellar quarter, it cautioned that supply chain challenges might persist throughout 2022, and it is not immune to the crisis.

A spike in Covid-19 cases in Shanghai have been weighing on Tesla’s supply chain and factory operations. Due to the impact of the outbreak, Tesla’s Shanghai gigafactory and some of its suppliers were temporarily closed. “Although limited production has recently restarted, we continue to monitor the situation closely,” said the company.

The production halt and supplier issues will likely take a toll on Tesla’s next quarter’s earnings. The Shanghai factory, which suspended operations from March 28 until about April 17, is Tesla’s most productive factory in the world. According to Forbes, the temporary halt could reduce Tesla’s second-quarter output by roughly 45,000 vehicles, representing at least $2 billion of revenue.

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