Tesla’s profit surges tenfold on record vehicle deliveries

Electric car maker's sales surged 98% annually to $11.9bn

Tesla reported nearly a tenfold annual increase in second-quarter net profit as the company delivered a record number of vehicles.

The company’s net profit in the three months to June 30, surged more than 98 per cent to $1.1 billion, almost $1bn more than the same period last year. It was the first time the electric vehicle manufacturer’s net profit surpassed the $1bn figure, marking its eighth straight profitable quarter.

While we saw ongoing semiconductor supply challenges in the second quarter, we were able to further grow our production

Revenue during the period was up 98 per cent year-on-year to $11.9bn, over $5.9bn more than in the previous year. It was the third consecutive quarter the company reported $10bn or more in sales, and it surpassed analysts' estimates of $10.5bn.

Overall automotive revenue hit $10.2bn, of which only $354 million – about 3.5 per cent – came from sales of regulatory credits.

“Global demand continues to be robust and we are producing at the limits of available parts supply,” Tesla said.

“In the second quarter, we broke new and notable records … this was primarily achieved through substantial growth in vehicle deliveries, as well as growth in other parts of the business.”

Tesla’s shares rose by about 2.2 per cent to $657.6 a share after the earnings announcement. The stock has climbed more than 113 per cent in the past 12 months.

The California-based company said that despite the Covid-induced supply chain disruptions that led to a global semiconductor shortage, it managed to meet its production targets.

“While we saw ongoing semiconductor supply challenges in the second quarter, we were able to further grow our production.

“The Tesla team, including supply chain, software development and our factories … worked extremely hard to keep production running as close to full capacity as possible.”

However, the company said the continued supply constraints will have a “strong influence on the rate of delivery growth” for the rest of this year.

Tesla delivered a record 201,250 vehicles in the second quarter of this year, falling slightly short of analysts’ expectations of 202,800 vehicles. This was about 8.9 per cent, or 16,450 vehicles, more than the cars sold in the first quarter of this year.

In the second quarter, it sold 199,360 units of Model 3s and Model Ys, although it delivered only 1,890 units of its more expensive Model S saloons and Model X SUVs, which are priced from $75,000.

Due to this, the average selling price (ASP) of vehicles dropped by about 2 per cent on an annual basis in the second quarter.

ASP dropped “as Model S and Model X deliveries were reduced in the second quarter due to the product updates and as lower ASP, China-made vehicles became a larger percentage of our mix”, the company said.

The company said it aims to achieve 50 per cent average annual growth in vehicle deliveries.

“We plan to grow our manufacturing capacity as quickly as possible over a multiyear horizon … [however,] it will depend on our equipment capacity, operational efficiency and the stability of supply chain.”

The company said it is on track to build its first Model Y vehicles at its German (Berlin) and US (Austin) factories this year.

To better focus on these factories and due to the limited availability of battery cells as well as other global supply chain challenges, Tesla has moved the launch of its lorry programme to next year.

The electric car maker said it has sufficient liquidity to fund its product road map, long-term capacity expansion plans and other expenses.

“The pace … will be influenced by the successful introduction of many new product and manufacturing technologies, ongoing supply chain-related challenges and regional permitting,” Tesla said.

The company increased its capital expenditure in the second quarter by about 176 per cent yearly to $1.5bn, while its quarter-end cash and cash equivalents decreased to $16.2bn in the three months.

This was driven mainly by a “net debt and finance lease repayments of $1.6bn, partially offset by free cash flow of $619m”, the company said.

Global sales of EVs accelerated last year, rising by 43 per cent to more than 3.2 million, Swedish data company EV-volumes.com said.

Tesla sold the most electric cars, delivering about 500,000 vehicles, followed by Volkswagen.

The company booked a $23m impairment related to Bitcoin after the cryptocurrency plunged in the second quarter. It still has $1.3bn of Bitcoin on its balance sheet.

Updated: July 29th 2021, 5:45 PM