posted a more than sevenfold increase in profits in the first quarter to hit a record, as CEO Elon Musk said the company could boost auto production more than expected this year, despite supply chain bottlenecks and disruptions in China.
Musk said on Wednesday that Tesla will likely produce more than 1.5 million vehicles by 2022, an increase of about 60% from last year. The company’s long-term goal is to increase vehicle deliveries by an average of 50% per year. Production in China would recover strongly, he said.
The world’s largest car company by value is recovering from a closure at its factory in Shanghai, where work was suspended on March 28 due to strict government measures designed to slow the spread of Covid-19. Tesla said it lost about a month of production due to the shutdown.
“Shanghai is coming back with a vengeance,” Mr. Musk said when the company reported revenues were up about 80% in the first three months of the year from a year earlier to $18.76 billion, marking a record profit of $3.32 billion. That surpassed the previous record $2.3 billion in the previous quarter. The results beat Wall Street’s expectations for both sales and earnings.
However, it is likely that factories will continue to operate below capacity through 2022, largely due to supply chain bottlenecks, Tesla said.
Tesla delivered approximately 310,000 vehicles worldwide in the first quarter, compared to 184,877 a year earlier and 308,650 in the fourth quarter.
Tesla shares closed close to 5% on Wednesday, before posting more than 4% in late trading after the company released its quarterly results, which were supported by a rise in regulatory credit income.
The company will sell the credits to rival automakers who need them to comply with emissions-related regulations. Such sales brought in $679 million in the most recent quarter, helped by a one-time benefit, up from $518 million a year earlier. Credit sales have long been critical to Tesla’s bottom line, although they have declined in recent quarters. The company has said it would become less dependent on them.
Mr. Musk joined the Tesla earnings call for nearly a week after making a non-binding $43 billion bid to take over Twitter Inc.
The social media company took a so-called poison pill a day after Mr. Musk made his offer. The move makes it more difficult for any investor to buy 15% or more of the company’s stock. Mr. Musk did not comment on the Twitter situation during the Tesla call.
In Shanghai, Tesla had about a week’s worth of auto parts inventory at its factory and was working with local authorities and suppliers to address logistical issues, Shanghai Television’s local government reported.
Manufacturers in the Shanghai region have had trouble getting parts as travel restrictions in China have made it difficult for trucks to enter the region, analysts said.
Customers, meanwhile, have to wait longer to get behind the wheel of a new Tesla. According to Bernstein Research, US buyers could wait about eight months from March for a new long-range compact sports car Model Y, one of Tesla’s most popular models. Delivery times have historically been about two to eight weeks domestically, the company said.
Tesla has delivered its first Model Ys at its new plants in Germany and Texas in recent weeks. Mr. Musk has said locating manufacturing would improve Tesla’s economy in the long run.
The automaker is charging more for its cars amid inflation and ongoing supply chain bottlenecks. According to Bernstein, the cost of one Model Y configuration increased by 30% in the year ending March. The price increases in China were not that extreme, ranging between 5% and 11% over the same period, depending on the model, data from Bernstein shows.
In some cases, Mr. Musk said, suppliers are charging 20% to 30% more for parts than last year. “I think the official numbers are actually underestimating the true magnitude of inflation,” Musk said.
Tesla signaled that software sales would become an increasingly important profit driver. By the end of the year, it expected 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, which are being tested by more than 100,000 people, Mr. Musk said in a statement a recent TED interview† The system, which costs $12,000 up front, won’t make vehicles autonomous.
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Musk provided additional details on Wednesday about the special robotic axi he teased earlier this month, saying he hopes the vehicle, which will have no steering wheel or pedals, will enter volume production by 2024. He said a trip in such a vehicle would cost less than a bus ticket.
Tesla is working to open up the company’s fast-charging network in the US to electric vehicles from other manufacturers, Senior Vice President Andrew Baglino said. The company launched a pilot program last year that will allow non-Tesla drivers in parts of Europe to use its charging network.
The company is also taking steps to enable more of its customers to insure their vehicles through Tesla. It aims to have 80% of U.S. customers have access to a Tesla insurance product by the end of the year, Chief Financial Officer 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 tweeted earlier this month that lithium prices had “risen to insane levels,” revised the idea that Tesla could go into mining and refining the metal and urged others to do the same.
Tesla has been flirting with that prospect for years, even making deals in the middle of the past decade to buy lithium mines in the US and Argentina, according to a person familiar with the matter. But the company didn’t go through with those acquisitions because it prioritized production of its Model 3 sedan, the person said. In the years since, the balance of power has shifted to suppliers as Ford Motor Co. car companies. and Volkswagen AG to newcomer Rivian Automotive Inc. are making efforts to obtain the materials they need to meet ambitious production targets for electric vehicles. Ford and General Motors Co. will report their results next week. Rivian’s quarterly results are expected in May.
Lithium carbonate prices averaged around $60,800 per ton in March, up about $50,000 from a year earlier, Benchmark data shows.
— Raffaele Huang contributed to this article.
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