Electric vehicle maker Tesla's shares rose more 5 per cent after the close of regular trading on Wednesday, after the company reported its largest quarterly net profit at the end of March, underpinned by an increased delivery of cars despite Covid-induced supply disruptions and a global shortage of semiconductors.
The world's most valuable car maker also passed the $3 billion mark in quarterly net profit for the first time.
Tesla’s first-quarter net profit rose about 658 per cent year on year to more than $3.3bn, over $2.8bn more than the income earnedin the same period in 2021. It was up about 43 per cent on a quarterly basis.
This is the 11th straight profitable quarter and the fourth consecutive three-month period with more than $1bn profit for the electric vehicles maker.
Meanwhile, a federal judge on Wednesday rejected an effort by Tesla Inc shareholders to obtain a "gag order" preventing chief executive Elon Musk from publicly discussing their lawsuit, in which they accuse him of deceiving them with a 2018 tweet about taking his electric car company private.
The ruling was issued by US District Judge Edward Chen in San Francisco.
Revenue during the January-March period jumped 81 per cent to more than $18.7bn, exceeding analysts’ expectation of $17.8bn.
This was the sixth consecutive time the company reported $10bn or more in sales. It was 5.9 per cent more on a quarterly basis.
The first quarter was a “record quarter by several measures such as revenues, vehicle deliveries, operating profit and operating margin”, the company said.
Public interest in “sustainable future continues to rise and we remain focused on growing as fast as is reasonably possible … expansion of our production capacity is core to our decision-making”, it said.
The Nasdaq-listed company's stock price rose more than 5.2 per cent to $1,028 a share in after-hours trading on Wednesday.
The company, which joined the $1 trillion market capitalisation club in October as its stock surged to a record high of more than $1,000 a share nearly 11 years after the company went public, said its cash and cash equivalents “increased sequentially by $300 million to $18bn” at the end of the last quarter.
It was driven mainly by free cash flow of $2.2bn, partly offset by debt repayments of $2.1bn.
The company’s total debt excluding vehicle and energy product financing dropped to less than $100m at the end of last quarter.
Tesla, which delivered a record 310,048 vehicles in the last quarter — 68 per cent up on a yearly basis — aims to rapidly increase its production and grab a huge market share in 2022.
In the first quarter, it sold 295,324 units of Model 3s and Model Ys, although it delivered only 14,724 units of its more expensive Model S saloons and Model X SUVs, which are priced from $75,000.
“We plan to grow our manufacturing capacity as quickly as possible. Over a multi-year horizon, we expect to achieve 50 per cent average annual growth in vehicle deliveries,” Tesla said.
But the rate of growth will depend on the company’s “equipment capacity, operational efficiency and the stability of the supply chain”.
Tesla’s own factories are running “below capacity for several quarters” as the supply chain became the main limiting factor, and it is likely to continue through the rest of 2022, the company said.
“Challenges around supply chain have remained persistent … in addition to chip shortages, recent Covid-19 outbreaks have been weighing on our supply chain and factory operations.”
While weekly production rates were strong in Shanghai factory, a recent surge in Covid-19 cases resulted in the temporary shutdown of the plant.
Although limited production has recently restarted, Tesla said it was monitoring the situation closely.
Increased prices of raw materials are also putting pressure on Tesla’s global operations.
“The inflationary impact on our cost structure has contributed to adjustments in our product pricing, despite a continued focus on reducing our manufacturing costs where possible,” the California-based company said.
In the first quarter, Tesla increased its capital expenditure by about 31 per cent yearly to more than $1.7bn, while its quarter-end cash and cash equivalents increased 2 per cent on an annual basis to $17.5bn in the three-month period.
The company said it has sufficient liquidity to fund its future product roadmap, long-term capacity expansion plans and other expenses.
In its energy segment, Tesla’s solar installations dropped by nearly 48 per cent due to the import delays on certain components.
Diversification of batteries is critical for long-term capacity growth, Tesla said.
Nearly half of Tesla vehicles produced in the first quarter were equipped with a lithium iron phosphate battery, containing no nickel or cobalt.