Tesla posts record quarterly profits on supply chain resilience

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posted a third consecutive record quarterly profit, in part due to the electric vehicle manufacturer’s ability to cope with persistent disruptions in the global supply chain.

The strong profits came after Tesla delivered around 73% more vehicles than a year ago. This growth was supported by a slight increase in sales of vehicles made in China, which is now home to Tesla’s largest auto plant in terms of production.

The company said on Wednesday it benefited from lower production costs. These benefits were partially offset by factors including a reduction in the average price of vehicles sold by the Company during the period.

The automaker reported third-quarter profit of $ 1.6 billion, up from $ 331 million a year earlier, on record revenue of $ 13.8 billion. The results exceeded Wall Street’s expectations of roughly $ 1.3 billion in profit and $ 13.6 billion in revenue.

Tesla, during the quarter, also had to deal with other issues affecting its business. in its publication of the results.

Tesla is more vertically integrated than many automakers, which helps the company cope with the chip shortage more easily than some of its competitors, analysts said. “Tesla has a better ability to pivot in chip supply, given its lead in software,” Credit Suisse Group AG

Analyst Dan Levy said in a recent note to investors.

The skeleton of a Tesla car in a showroom in China, now home to Tesla’s largest auto factory in terms of production.


Photo:

Sheldon Cooper / Zuma Press

Analysts expect Tesla’s vehicle deliveries to continue rising in the current quarter to around 266,000, according to FactSet, which positions the company to deliver nearly 900,000 vehicles to customers in 2021. The company said it aims to increase deliveries by more than 50%. out of the total of nearly half a million vehicles last year.

Tesla shares have soared in recent weeks, closing around $ 866 on Wednesday, near their record close of $ 883.09 in January. The stock fell less than 1% in after-hours trading after the company’s earnings were released.

However, finding solutions to parts shortages doesn’t come cheap.

“We are seeing significant cost pressure in our supply chain,” chief executive Elon Musk said at the company’s annual meeting of shareholders earlier this month. “The amount of money we spend on flying coins around the world is just not great but hopefully temporary.”

Mr Musk also suggested during the meeting that parts shortages were contributing to delays in Tesla products. The company has postponed the deployment of its Cybertruck pickup for about a year. Production is now expected to begin at the end of 2022. Production of the company’s long-delayed semi-trailer truck, originally slated for 2019, has been pushed back further until 2023.

“We were essentially limited by multiple supply chain shortages, like so many supply chains of so many types, not just chips,” Mr. Musk said.

Tesla will move its headquarters to Austin, Texas, CEO Elon Musk said, comparing the current overcrowded operations at the Fremont, Calif., Plant to “Spam in a Box.” He said the electric vehicle maker will continue to expand in California. Photo: Brendan Smialowski / AFP / Getty Images

Mr Musk, a mainstay of Tesla’s earnings calls, did not appear to attend the company’s third quarter analyst briefing on Wednesday. The CEO, who also runs Space Exploration Technologies Corp. and complained about his workload, said in July he would no longer participate in the company’s earnings calls by default.

Tesla aims to lay the groundwork for its growth by opening two new vehicle factories by the end of the year, one in the Austin, Texas area where the company is relocating its headquarters; the other outside Berlin.

Tesla said it was building its first pre-production vehicles in Texas and expected to receive final permit approval before year-end for its plant in Germany. The company said it intends to start regular production of Model Y vehicles at both sites before the end of the year.

The company, meanwhile, faces increased scrutiny of its advanced driver assistance tools, which make tasks such as navigating a lane on the highway easier.

Last week, the National Highway Traffic Safety Administration, the federal auto safety regulator, feared that a lack of transparency around such features – which do not make vehicles self-sufficient – could undermine safety oversight. . The agency opened an investigation into Tesla’s autopilot driver assistance system in August after a series of accidents involving Teslas and one or more parked emergency vehicles.

Tesla did not respond to requests for comment on the probe. The NHTSA, as part of its investigation, has asked Tesla to provide volumes of information about its advanced driver assistance technology. The first batch of data is due to NHTSA on Friday.

Foxconn, the Taiwanese company known for assembling Apple products, has unveiled three prototypes of electric vehicles. Stephanie Yang of the WSJ attended the launch event to see how the company is diversifying its activities to gain a foothold in the auto industry. Photo: I-Hwa Cheng / Bloomberg News

Corrections and amplifications
Tesla Inc. posted its third consecutive record quarterly profit on Wednesday. An earlier version of this article indicated that this was the third consecutive quarterly profit. (Corrected October 20.)

Write to Rebecca Elliott at [email protected]

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