Tesla profits jump despite production disruptions

Tesla withstood disruption to production in China and the high costs of scaling up new plants in Texas and Germany to report a 57 per cent jump in adjusted earnings per share in its latest quarter.

The company’s second-quarter results brought a degree of relief after the electric carmaker had warned of production and supply strain stresses. Revenue, at $16.9bn, was up 42 per cent from the year before, though the figure fell slightly short of the $17.1bn Wall Street had been expecting.

The latest profit figure was struck after an impairment charge from the fall in the value of Tesla’s bitcoin holdings, though it did not provide further details. Limiting further damage, Tesla said it had converted 75 per cent of its stake — which was valued at $1.99bn at the end of last year — into fiat currency, largely ending chief executive Elon Musk’s controversial crypto bet.

Spending on the new production facilities pushed Tesla’s closely watched gross profit margin from automotive activities down to 27.9 per cent, compared to the record margin of 32.9 per cent it reported in the first quarter.

Tesla had disclosed that production shutdowns in Shanghai and parts shortages had wiped as much as a quarter off its vehicle deliveries in the three months ended June 30. Though the 254,695 vehicles it shipped was still 27 per cent up on a year before, the figure represented its first sequential quarterly drop in more than two years.

The news came ahead of an call with analysts where Tesla was expected to give its latest prediction on total sales this year. Supply chain and other pressures in the first half have left it needing about 935,000 vehicle deliveries in the final six months of the year to reach the 1.5mn total many analysts have been hoping for, or an increase of 70 per cent from the same period of 2021.

Before the release of the results, Tesla’s share price had fallen 36 per cent since Musk first revealed he had built up a sizeable stake in Twitter, raising worries about whether his involvement in the social media company would lead to the sale of part of his Tesla stake. The tech-heavy Nasdaq Composite has fallen 13 per cent in the same period.

Tesla shares initially jumped more than 4 per cent following the results on Wednesday, but trimmed their advance to 0.5 per cent.

For the second quarter, Tesla reported adjusted earnings per share of $2.27, up from $1.45 the year before. Based on formal accounting principles, earnings per share climbed to $1.95, up from $1.02.