(Reuters) -On Wednesday, Tesla Inc. revealed a quarterly earnings decline that was less severe than anticipated, as a series of price increases on its electric cars (EVs) helped offset production issues due to the COVID-19 lockouts in China.
According to Chief Financial Officer Zachary Kirkhorn, while the goal has become more difficult, “it remains doable with excellent execution.”
Elon Musk, the chief executive officer of Tesla, stated that he anticipates inflation to begin easing by the end of 2022 and most commodity prices to normalise.
On a conference call, Musk stated that Tesla’s issue is not with demand, but with manufacturing. Despite what he termed “embarrassingly high” vehicle costs, he disproved the notion that global economic woes were affecting Tesla’s popularity.
Since the beginning of 2021, the price of the long-range variant of Tesla’s Model Y in the United States has increased by more than 30 percent, to its current price of $65,990.
In after-hours trading, Tesla’s stock rose by nearly 1 percent. Since its peak in November, the stock price has dropped by nearly 40%.
The China plant of Tesla finished the second quarter with a record monthly output. Musk stated that new plants in Texas and Berlin are expected to create 5,000 automobiles per week by the end of the year, adding that Berlin produced 1,000 automobiles per week in June.
Musk had previously described the new factories as “gigantic money furnaces” and claimed to have a “worst feeling about the economy.”
Morgan Stanley (NYSE: MS) analysts cited “near-term margin headwinds due to (new) issues with ramping up additional manufacturing, particularly in Berlin” in a research note following Tesla’s earnings announcement.
Tesla executives acknowledged a continued shortage of older-generation microchips, but stated that there were no severe issues with the availability of chips and batteries, barring any unanticipated COVID-related shutdowns.
The EV manufacturer reported a quarterly adjusted profit of $2.27 per share, compared to analysts’ consensus forecast of $1.81 per share. This was a decrease from the previous quarter’s $3.22.
Because of inflation, the company’s automotive gross margin went down to 27.9 percent, which is less than the same time last year and the previous quarter.
Tesla’s overall sales decreased to $16.93 billion in the second quarter from $18.76 billion in the first quarter, bringing to an end the company’s recent streak of generating record revenue.
According to data from IBES and Refinitiv, analysts anticipated revenue of $17.10 billion.
Bitcoin to US Dollar
Tesla reported that it had converted around 75% of its bitcoin acquisitions into fiat money, adding $936 million to its cash position.
Musk stated that the sale was intended to increase liquidity since Tesla did not know how long the COVID lockdown in China would last. Tesla has not sold any of its Dogecoin cryptocurrency assets.
“This should not be interpreted as a decision on bitcoin,” he added, adding that Tesla was open to growing its holdings of cryptocurrencies in the future.
Musk stated in May of 2017 that Tesla would not sell its bitcoin holdings.
“The bitcoin losses highlight a crucial aspect of the investment case for Tesla: its eccentric owner. “Like Hoy, an analyst at Hargreaves Lansdown, stated that Musk’s tremendous invention has benefited the company, but his personality is beginning to cause governance concernsous invention has benefited the company, but his personality is beginning to cause governance concerns.”
