Tesla said on Wednesday its second-quarter profit fell by nearly a third from the first as deliveries slowed due to the automaker’s shutdown in Shanghai and a shortage of raw materials.
profit $2.3 billion in the quarter, Tesla said, compared with $3.3 billion in the first quarter, which was a record. Sales fell to $16.9 billion from $18.8 billion in the first quarter.
The automaker was also hurt by the sharp drop in the price of bitcoin. Tesla said in early 2021 that it had invested $1.5 billion in cryptocurrencies. About 75 percent of bitcoin had been sold as of the end of June, the company said Wednesday.
Profits nearly doubled compared to the second quarter of 2021. Earnings for the quarter beat analysts’ expectations. But because Tesla is a fast-growing company, its quarterly progress or shortfalls are more of a concern to investors.
Tesla dominates the global electric vehicle market and is growing, while traditional automakers such as Toyota and General Motors have seen sharp declines in sales. But the final quarter was bumpy.
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Tesla vehicles delivery From April to June, it was down 18% compared to the first three months of the year, an unusual drop for a company that has posted solid quarterly growth in recent years. (Deliveries are up 26% from a year ago.)
In China, which accounts for about 40% of Tesla’s sales, the Shanghai plant has been plagued by pandemic-related shutdowns and shortages of key components and materials. Tesla failed to ramp up production as planned at new factories near Austin, Texas, and Berlin.
“It’s a bit of supply chain hell,” Tesla CEO Elon Musk said on a conference call Wednesday.
Last month, he told an interviewer at the company’s fan club that the Austin and Berlin factories were “money stoveIn producing a small number of vehicles, the company is spending billions of dollars. Getting them up and running and getting the Shanghai factory back up and running is Tesla’s top priority, he said.
Tesla said production in Shanghai picked up in June and that progress was being made at plants in Berlin and Austin. “We are focused on a record second half of 2022,” Tesla said in the earnings report.
The electric vehicle market is increasingly competitive, and traditional automakers are eating into Tesla’s lead. Hyundai, Kia and Ford gained significant market share, while Tesla lost market share in the US. Tesla had 66% of the U.S. electric vehicle market at the end of the second quarter, down from 78% in the fourth quarter of 2021, according to data compiled by Kelley Blue Book.
Laura Hoy, an equity analyst at investment firm Hargreaves Lansdown, said in an email that Tesla’s problems are mostly short-term and profits should improve in the coming months. But she expressed concern about Tesla’s exposure to bitcoin.
“Bitcoin’s loss points to an important part of Tesla’s investment case — its eccentric owners,” Ms Hoy said. “While Musk’s impressive innovation has served the company well, his personal talents are starting to raise governance issues.”
Musk said Tesla had sold its bitcoin holdings to increase its cash buffer in light of the problems in Shanghai. “This shouldn’t be seen as some sort of judgment on bitcoin,” he said Wednesday. He said Tesla has yet to sell its holdings of another cryptocurrency, Dogecoin.
Tesla had $18.3 billion in cash and cash equivalents during the quarter, according to the company.
Cryptocurrencies are a “sideshow” and “not something we often think about,” Musk said.
“The fundamental benefit of Tesla, the reason we’re doing it, my main motivation,” he said, “is to make the day of sustainable energy come sooner.”
