new York It doesn’t work without Elon Musk: For the third time this year, the Tesla boss led the conference call to the quarterly figures – even though he actually wanted to leave it to his CFO in the future. Apparently there was too much good news from his point of view.
“We set production records in Fremont and Shanghai. The second half of the year could bring further records,” Musk said on Wednesday evening. And that despite many problems: “We’ve had a few years in supply chain hell.”
In fact, the electric car maker Tesla has also increased its profits thanks to price increases. The bottom line for the past quarter was $2.2 billion, compared with $1.1 billion a year ago, the group announced on Wednesday after the US stock market closed. Only in the first quarter of 2022 was the profit even higher.
Tesla has raised the prices of its vehicles several times this year. Among other things, this should compensate for higher costs for lithium, which is used in the batteries, and for aluminium.
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Revenue fell to $16.9 billion from $18.7 billion in the second quarter, below analysts’ expectations. This ended a string of record sales as Tesla opened its Schanghai had to temporarily close due to a Covid lockdown. That squeezed gross margin, according to CFO Zach Kirkhorn.
Production in Berlin ramps up
There were also production problems in new plants. Production in Grünheide near Berlin and in Texas is only slowly ramping up. At least one “important milestone” was reached in Berlin, as Musk explained: “We produced 1,000 cars a week in June.” The new factory in Texas will “take a few months” to reach this mark.
The strong gains were well received on the stock market. Tesla shares are up about 4 percent in after-hours trading after losing about 38 percent since the start of the year.
The result was better than Tesla expected, Wedbush analyst Dan Ives told Handelsblatt. “The repetition of the 50 percent profit growth will be a main focus for bullish investors in the future.” The carmaker still has a lot of homework to do. “But overall, Tesla coped better with margin and supply chain issues in the second quarter than many stock market traders feared.”
It is also positive that Tesla has written off its foray into the crypto world, according to Ives. “This ends a dark chapter for Tesla.” The group said on Wednesday evening that by the end of the second quarter “about 75 percent of our Bitcoin purchases had been exchanged for fiat currency”.
Increasing sales
Auto expert Alyssa Altman of consulting firm Publicis Sapient said: “Tesla did not have an easy quarter with the Shanghai shutdown impacting production at the Gigafactory, the challenges of the Bitcoin market and the impact of the chip crisis and supply chain issues on the entire auto industry.”
Musk said in an interview in May that the new factories in Grünheide near Berlin and Texas are currently losing “billions”. The reason is a lack of batteries and supply chain problems due to the situation in the Chinese ports.
The past two years have been an “absolute nightmare” due to supply chain disruptions and constant new problems. “And we’re not done with it yet.” The biggest concern for Tesla is how to keep the factories running to be able to pay the employees and not go bankrupt, Musk said at the time. On Wednesday evening, he also justified the bitcoin exchange with the strengthening of liquidity.
According to Altman, however, the future is primarily evaluated on the markets. “Electric car sales in Australia are increasing, Tesla continues to work on its autopilot and Panasonic is looking to build a $4 billion battery factory in Kansas.”
Another positive would be the likely end of the Twitter adventure, which would allow Musk to focus more on Tesla again. The carmaker is geared towards the long term and is “successful even in difficult times,” she says.
brand under pressure
But not all market observers are so rosy about the future. For Mario Natarelli, partner at the brand consultancy MBLM in New York and longtime Musk observer, both Twitter and Tesla have been damaged by the capers surrounding Musk’s first announced and then canceled takeover of the short message service.
Tesla is primarily damaged for one reason: “The question is whether you can separate Musk from Tesla. I do not think so. The man and the car are intertwined.” Musk shook up humanity and was successful in three futuristic industries – payment, space travel and e-mobility. “It’s really impressive and amazing,” Natarelli told Handelsblatt.
“But something has changed. The challenger, the underdog, has become a kind of host. He is now the richest person in the world. And if he continues to behave as provocatively and eccentrically as he used to, it no longer feels likeable, but threatening.” And that is increasingly having an effect on Tesla.
According to Natarelli, Musk can expect new advances and takeover ideas. However, due to shaken market confidence in its reliability, these would be more expensive and more difficult to implement.
With material from Reuters.
More: Elon Musk described the new factories as “money incinerators” – but Tesla will present good numbers.