Tesla Posts Record Earnings at Start of Turbulent Year -- 2nd Update
April 26 2021 - 6:22PM
Dow Jones News
By Rebecca Elliott
Tesla Inc. posted a record quarterly profit despite supply
disruptions, fueled by rising deliveries and increasingly
broad-based demand for electric vehicles.
The Silicon Valley car maker has enjoyed booming sales, driven
by both its popular Model Y compact sport-utility vehicle and
sustained demand in China. The company also has benefited from the
wider embrace of plug-in cars as governments across the world push
to phase out gasoline-powered vehicles.
"We've seen a real shift in customer perception of electric
vehicles, and our demand is the best we've ever seen," Chief
Executive Elon Musk said Monday on an investor call.
Tesla on Monday said revenue in the first quarter jumped around
74% from the same period a year earlier to $10.4 billion. The
company generated a $438 million net profit, up from $16 million a
year ago. Wall Street on average expected the company to report
sales of about $10.5 billion and net income of around $509 million
for the January through March period, according to analysts
surveyed by FactSet.
Tesla said it delivered 184,877 vehicles in the first three
months of the year, more than double the number during the same
period a year earlier. The company, which delivered nearly half a
million vehicles in 2020, reaffirmed it expects that figure to rise
more than 50% this year.
The company's strong financial start to the year comes as it
faces challenges on other fronts. Federal auto-safety officials are
investigating the fatal fiery crash of a Model S sedan earlier this
month in Texas. Neither of the victims was found in the driver's
seat, local officials have said. The National Highway Traffic
Safety Administration's probe of the wreck is one of more than two
dozen investigations of crashes involving Tesla vehicles.
Tesla has also faced parts shortages that led the company to
briefly shut down its Fremont, Calif., factory in February. Rivals
such as General Motors Co., Ford Motor Co. and Volkswagen AG have
had to idle some production capacity because of a global
semiconductor shortage.
"We were able to navigate through global chip-supply shortage
issues in part by pivoting extremely quickly to new
microcontrollers," the company said in a note to shareholders,
adding that it also was devising new software for chips made by new
suppliers.
Tesla said it had successfully lowered the cost of making cars,
helping offset a decline in the average price of its vehicles.
The company's bottom line also benefited from several factors
not directly linked to car sales. Its financial results have been
aided by the sale of regulatory credits to rival auto makers that
need them to comply with emissions-related rules. Such credits
brought in $518 million in the most recent quarter, up from $354
million during the year-earlier period. Tesla has previously said
it doesn't expect such sales to be a material part of its
business.
The company also said it saw a positive earnings effect from the
sale of bitcoin in the period. Its cash holdings fell to $17.1
billion, from $19.4 billion as of year-end, as it reported a net
cash outflow of $1.2 billion in the quarter from its purchase of
the cryptocurrency. The company is now accepting bitcoin as payment
for products sold in the U.S.
Tesla's success in popularizing electric vehicles transformed
the company into the world's most valuable car maker. Its success
also spurred legacy car makers and startups alike to develop
competing models, some of which are showing early signs of eroding
Tesla's market share.
In the U.S., for example, Tesla vehicles accounted for roughly
70% of the all-electric vehicles sold in the first quarter,
according to the research firm Cox Automotive Inc. That is down
from about 82% during the same period a year earlier.
Tesla's stock soared more than eightfold last year. It is up
roughly 4.5% in 2021 after advancing 1.2% on Monday ahead of
results. The stock retreated more than 2% in after-hours
trading.
Global demand for electric vehicles continues to increase,
though, and Tesla is adding production capacity to keep pace. The
company said it remains on track to begin producing vehicles this
year at its new car plants near Austin, Texas, and outside Berlin,
its first in Europe. Tesla has expanded capacity at its first
overseas plant in Shanghai and began delivering China-made Model Y
vehicles this year after kicking off with the Model 3 sedan in
2019.
China has been a growth engine for Tesla, helping to lift the
company to its first full-year profit last year. But the company
has hit a rough patch in the market recently. Chinese authorities
summoned Tesla in February over consumer quality complaints. The
government also restricted the use of Tesla vehicles by military
personnel as well as employees at key state-owned companies over
data-security concerns.
Earlier this month, a single protester with a disputed claim
about the safety of Tesla's vehicles drew widespread attention
across the Chinese internet, which is closely controlled by the
government.
Tesla has apologized for its treatment of some customers in
China and said it would do better. Mr. Musk said last month that
Tesla would be shut down if it used its vehicles to spy, which he
said was "a very strong incentive for us to be very
confidential."
Tesla also reaffirmed that it expects to deliver its first
semitrailer trucks to customers in 2021, two years after initially
planned. Mr. Musk said in January that the company didn't have
enough battery cells to go into production with the vehicle.
Write to Rebecca Elliott at rebecca.elliott@wsj.com
(END) Dow Jones Newswires
April 26, 2021 18:07 ET (22:07 GMT)
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