Tesla's second-quarter profit fell 32 percent from record levels in the first quarter as supply chain issues and pandemic lockdowns in China slowed the production of its electric vehicles.
But the Austin, Texas, company still surprised analysts
Wednesday with a better-than-expected $2.26 billion net profit for the quarter.
Tesla stuck with a prediction of 50 percent annual vehicle sales growth over
the next few years, but said that depends on the supply chain, equipment
capacity and other issues.
The company made a record $3.32 billion in this year's first
quarter.
Tesla's sales from April through June fell to 254,000
vehicles, their lowest quarterly level since last fall. But the company
predicted record-breaking production in the second half and said that in June
it had the highest production month in its history.
Industry analysts had been expecting lower earnings after
the lower sales figures and tweets by CEO Elon Musk about laying off 10 percent
of the company's workforce due to fears of a recession. In an interview, Musk
described new factories in Austin and Berlin as “money furnaces” that were
losing billions of dollars because supply chain breakdowns were limiting the
number of cars they can produce.
But Tesla exceeded Wall Street expectations from April
through June with adjusted earnings of $2.27 per share. Analysts polled by
FactSet expected $1.81. Revenue was $16.93 billion, beating estimates of $16.54
billion.
Edward Jones analyst Jeff Windau said the earnings were
better than expected. He noted that the decrease in automobile revenues from
the first quarter was offset by stronger energy storage, solar and services
performance.
Musk reiterated the 50 percent annual vehicle sales growth
forecast but said it depends a lot on circumstances that the company might not
be able to control.
Windau said the forecast “shows the confidence they have in
their ability to grow the electric vehicle market.”
Tesla shares rose 1.5 percent to $753.40 in extended trading
on Wednesday.
The company said it converted 75 percent of its Bitcoin
investment to government currency during the quarter, adding $936 million in
cash to its balance sheet. It spent $1.5 billion on the investment last year.
Overall, it booked a $106 million cost
for Bitcoin, plus added costs for employee reductions.
CEO Elon Musk said the Bitcoin holdings were sold to raise
cash because of uncertainty over how long pandemic lockdowns would last in
China. He said Tesla is open to increasing bitcoin holdings in the future.
The price of Bitcoin has fallen about 50 percent so far this
year.
Musk also said Tesla is seeing indications that inflation
may be declining as prices for most commodities drop. He cautioned against
making economic predictions but said commodity prices, such as steel and
aluminium, are trending down.
Musk said Tesla's “Full Self-Driving” beta test software is
on track to be released before the end of this year to all North American
customers who want to buy it.
And with regulatory approval, it will be released in Europe
and other parts of the world, he said. Despite its name, “Full Self-Driving”
cannot drive itself, and Tesla warns that drivers have to pay attention all the
time.
Chief Financial Officer Zachary Kirkhorn said the company is
seeing “maybe a little” impact on demand due to macroeconomic issues.
Musk reiterated that Tesla has a vehicle supply problem, not
a demand problem, and said it now takes six months to a year to get a new
vehicle. He said the company has increased prices to “embarrassing levels” due
to inflation, but he hopes to reduce prices a bit.