Tesla 1Q earnings 7 times more than year ago on strong sales

DETROIT — Tesla reported Wednesday that its first-quarter net earnings were over seven times greater than a year ago, powered by strong sales despite global supply chain kinks and pandemic-related production cuts in China. The record-breaking $3. 32 billion from January through March. The company from Austin, Texas made $3. 22 per share. This is well above Wall Street estimates of $2. 26 per share according to data provider FactSet.

Revenue for the quarter was $18. 76 billion, also beating estimates of $17. 85 billion. Multiple price increases were used to offset rising costs for lithium, nickel and cobalt.

It may be more difficult for Tesla to post similar numbers in the future. It is facing rising commodity prices and costs as it ramps up new factories in Texas and Germany. It is also facing increased competition from legacy and startup automakers who are releasing more electric vehicles.

But CEO Elon Musk said on a conference call with analysts that waiting lists are long even as Tesla raised prices anticipating costs that will come during the next six to 12 months. He stated that “we are not demand limited, but we are production limited.”

Tesla was spared many price increases due to long-term contracts, Musk stated. However, those contracts will soon expire. Some suppliers are seeking 20% to 30% price increases from last year through the end of this year, he said. We hope we don’t have to increase the price further,” Musk stated.

Tesla’s lowest-priced car, the Model 3, now starts at nearly $47,000. Tesla also claims it has been able to reduce costs by using manufacturing efficiencies and a new chemistry for its batteries that has a higher energy density per cell.

The company said its weekly production for the quarter was strong, but a spike in COVID-19 cases brought the temporary shutdown of its factory in Shanghai, as well as part of Tesla’s supply chain.

Tesla appears to have handled parts shortages more effectively than the rest. Musk stated that the Shanghai plant is now operational, but it lost a few weeks of production. Musk still expects Tesla will build 1.5 million vehicles this fiscal year.

Shares of Tesla closed Wednesday down nearly 5% at $977. 20, but it more than regained the day’s losses in extended trading, after the company released its numbers. The stock has fallen 7.5% so far in the year.

Musk was not asked about his $43 billion hostile bid to take over Twitter.

Despite the Chinese production and supply chain problems, Tesla reiterated its guidance of 50% annual average growth in vehicle deliveries over the next several years. The company stated that the growth rate will depend on the equipment capacity, operational efficiency, and the stability of the supply chains.

Although production has started at the Texas and German factories, Tesla said the ramp up at both sites will take time. According to Tesla, its factories are currently operating below capacity due to parts shortages.

Tesla said it expects that “Full Auto-Driving” beta testing software will be available to all U.S. customers by the end of this year. Musk said about 100,000 owners are testing the system now, on public roads. Tesla stated that the cars cannot drive themselves, despite their name. Drivers must be alert and ready to intervene whenever necessary.

Tesla delivered a record 310,000 vehicles worldwide in the first quarter, up roughly 68% from the same period in 2021. It delivered 185,000 vehicles in the first quarter of last year.

Last year the company delivered a record 936,000 vehicles, an 87% increase over 2020 numbers. The company said in February that it expects 50% annual growth in sales, meaning it expects about 1.4 million vehicles to be delivered this year.