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Tesla reports record quarterly profit of $3.3 billion

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posted a more than seven-fold increase in first-quarter profit to hit a record as Chief Executive Elon Musk said the company could grow vehicle production more than expected this year despite supply chain shortages and disruptions in China.

Musk said on Wednesday Tesla is likely to produce more than 1.5 million vehicles in 2022, up about 60% from a year earlier. The company’s long-term goal is to increase vehicle deliveries by an average of 50% annually. Production in China will recover strongly, he said.

The world’s largest automaker by value is recovering from a shutdown of its Shanghai factory, where work was suspended on March 28 due to strict government measures to slow the spread of Covid-19. Tesla said it lost about a month of production as a result of the shutdown.

As Elon Musk attempts to buy Twitter, the WSJ looks back at Twitter’s former suitors like Salesforce, Disney, and Alphabet. Tech reporter Tim Higgins explains why those past talks failed and what’s different this time. Picture: Nikki Walker

“Shanghai is coming back with a vengeance,” Mr Musk said, as the company reported that revenue for the first three months of the year rose about 80% year over year to $18.76 billion and posted a record 3-month profit .32 billion US dollars. This surpassed the previous high of 2.3 billion US dollars from the previous quarter. The results beat Wall Street expectations for sales and earnings.

However, factories are expected to continue operating below capacity into 2022, largely due to supply chain bottlenecks, Tesla said.

Tesla delivered about 310,000 vehicles worldwide in the first quarter, up from 184,877 a year earlier and 308,650 in the fourth quarter.

Tesla shares closed nearly 5% on Wednesday before gaining more than 4% in late trade after the company released its quarterly results buoyed by a surge in regulatory loan income.

The company sells the credits to competing automakers who need them to comply with emissions-related regulations. Those sales brought in $679 million last quarter, helped by a one-time benefit, up from $518 million a year ago. Credit sales have long been critical to Tesla’s bottom line, though they’ve declined in recent quarters. The company announced that it would become less dependent on them.

Mr Musk took part in Tesla’s earnings conference call nearly a week after he made a $43 billion non-binding offer to acquire Twitter inc

The social media company picked up a so-called poison pill a day after Mr Musk made his offer. The move makes it harder for any investor to buy 15% or more of the company’s stock. Mr. Musk did not address the Twitter situation on the Tesla call.

In Shanghai, Tesla had about a week’s worth of vehicle parts inventory at its plant and was working with local authorities and suppliers to solve logistics problems, local government-run Shanghai Television reported.

Manufacturers from the Shanghai region have been struggling to get parts delivered because China’s travel restrictions have made it difficult for trucks to get to the region, analysts said.

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According to Bernstein Research, Tesla raised the prices of its cars and likely helped offset the cost of increasing production at new factories like Giga Texas near Austin.


Photo:

Sergio Flores for the Wall Street Journal

Customers, meanwhile, will have to wait longer to get behind the wheel of a new Tesla. Beginning in March, U.S. buyers could expect to wait about eight months for a new compact, long-range Model Y sport-utility vehicle, one of Tesla’s most popular models, according to Bernstein Research. Delivery lead times have historically been around two to eight weeks domestically, the company said.

Tesla delivered its first Model Y, made at its new plants in Germany and Texas, in recent weeks. Mr. Musk has said that localizing production would improve Tesla’s long-term economics.

The automaker has been charging more for its cars amid inflation and ongoing supply chain shortages. According to Bernstein, the cost of one configuration of the Model Y increased 30% in the year ended March. Price increases in China have not been extreme, ranging from 5% to 11% over the same period, depending on the model, Bernstein data shows.

In some cases, Musk said, suppliers are charging 20% ​​to 30% more for parts than they were last year. “I think the official figures actually underestimate the true magnitude of inflation,” Musk said.

Tesla signaled that selling software would become an increasingly important profit driver. By the end of the year, an advanced driver assistance feature designed to help vehicles navigate cities will be available to anyone in the US who has purchased Tesla’s “Full Self-Driving” package. Tesla has gradually released trial versions of the technology that more than 100,000 people are testing, Mr Musk said in a recent TED interview. The system, which costs $12,000 upfront, doesn’t make vehicles autonomous.

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Mr Musk on Wednesday provided additional details about the special robotaxi he teased earlier this month and said he hopes the vehicle, which will have no steering wheel or pedals, will go into mass production in 2024. He said a ride in such a vehicle would cost less than a bus ticket.

Tesla is working to open the company’s fast-charging network in the United States to electric vehicles from other manufacturers, said senior vice president Andrew Baglino. The company launched a pilot program last year that allows non-Tesla drivers in parts of Europe to use its charging network.

The company is also taking steps to allow more of its customers to insure their vehicles through Tesla. By the end of the year, 80% of U.S. customers should have access to a Tesla insurance product, CFO Zachary Kirkhorn said.

The automaker, like many in the industry, is also struggling with rising costs for the materials used in the rechargeable batteries that power electric vehicles. Raw materials account for 80% of the cost of a lithium-ion battery, up from 40% in 2015, according to Benchmark Mineral Intelligence, which tracks the battery supply chain.

Mr Musk, who earlier this month tweeted that lithium prices had “risen to insane levels,” revived the idea that Tesla could get into the business of mining and refining the metal, and urged others to do so to do as well.

Tesla has flirted with the prospect for years, even striking deals to buy lithium mines in the US and Argentina in the middle of the last decade, according to a person familiar with the matter. But the company didn’t make those acquisitions as it prioritized production of its Model 3 sedan, the person said. Since then, the balance of power has shifted towards suppliers as auto companies from Ford Motor Co. and Volkswagen AG to newcomer Rivian Automotive Inc. struggle to secure the materials they need to meet ambitious electric vehicle production targets . Ford and General Motors Co. are scheduled to announce their results next week. Rivian’s quarterly results are due in May.

Lithium carbonate prices averaged around $60,800 per tonne in March, up around $50,000 year-on-year, benchmark data shows.

write to Rebecca Elliott at rebecca.elliott@wsj.com

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