Strong demand pushes Tesla to record profit in Q1

Despite supply chain worries and other manufacturing problems, electric car maker Tesla succeeded in beating expectations and posting a record financial performance in the first quarter of this year. Especially the car branch fared well because of growing demand. But the automaker remains cautious for the rest of the year because of the supply constraints.

The world’s most valuable carmaker, Tesla, has beaten analysts’ forecasts once more when it presented its financial result for the year’s first quarter. Revenue has climbed to $18,76 billion from $10,38 in Q1 of 2021.

The rise represents a growth of no less than 81%. Net income has grown sevenfold to $3,3 billion. The sunny results come from a challenging context, with factories not reaching their full potential.

Zero-carbon credits

Tesla delivered 310 048 vehicles in the first three months of the year – a record – but the good financial results also stem from CO2 credits sold to third parties such as other car companies. They were worth $679 million, more than double compared to the last quarter of 2021.

Tesla received a one-time $288 million benefit, explaining the sudden hike in Q1. However, CFO Zach Kirkhorn claimed that these revenues are slowing down. Still, the figures illustrate that the momentum for the electric car adoption lies with its originator, with established names in the sector still stuck in a catching-up position.

The only black spot in Tesla’s briefing came from the “energy generation and storage” revenues, which declined compared to previous quarters.

Below capacity

At the Cyber Rodeo Event, inaugurating Tesla’s new facility in Austin, Texas, Elon Musk already stated that the focus for this year is on ramping up worldwide production instead of launching new products. While he points at supply-chain challenges not disappearing before the end of the year, the CEO expects output to grow further in the next quarters of 2022.

Tesla delivered 936 000 cars last year. With the new plants in Berlin and Austin up and running, it aims to improve that figure to 1,5 million units this year. In the financial results statement, the carmaker said that “our factories have been running below capacity for several quarters as supply chain became the main limiting factor…”

Lithium and lockdowns

It remains to be seen how the manufacturing problems, with costs rising significantly for crucial components due to the global supply bottleneck, will influence prices for Tesla’s range.

Especially lithium for battery production is a hurdle growing bigger every day. According to Benchmark Mineral Intelligence, lithium prices have risen 478% in January in a year-to-year comparison. Musk already suggested that Tesla should move into the mining business with these soaring costs in mind.

In China, Tesla faces production delays caused by lockdown measures in its Shanghai Gigafactory. However, Musk says that the volume losses will be recuperated in the coming months.

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