November 27, 2022

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Tesla's Margins Increase After Production Stops - E24

Tesla’s Margins Increase After Production Stops – E24

The electric car manufacturer increased its profits by a billion dollars. At the same time, the company is reducing its bitcoin holdings.

When the Tesla factory opened in Berlin earlier this year, Elon Musk was satisfied.
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Tesla’s results are better than analysts had expected, but problems in Shanghai pushed margins to third-quarter levels last year.

Key numbers from the Tesla report:

  • Revenue ended at $16.9 billion, up from $11.96 billion last year.
  • Profit ended at $2.62 billion, up from $1.6 billion last year.
  • Earnings per share ended at $2.27.

Earlier, Tesla was expected to generate revenue of $16.88 billion, while earnings per share were estimated at $1.83.

Tesla shares rose about four percent in the aftermarket services market shortly after the report was released. But after half an hour, the ascent flew by. At 22.45, the share rose 0.2 percent in aftermarket services.

Tesla previously announced that it delivered 254,695 vehicles to its customers in the second quarter. Of those, 238,533 were Type 3 and Y, while the others were Model S and X. The number of vehicles delivered was 50,000 fewer compared to the previous quarter.

Margins shrunk

“Although we faced several challenges, including limited production and shutdowns in Shanghai for the majority of the quarter, we delivered operating margin among the highest in the industry at 14.6 percent,” Tesla wrote in the report.

Operating margin fell by about five percentage points in the first quarter, and returned to levels in the third quarter of last year.

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The company once again highlights high raw material prices and logistical challenges as contributors to reducing margins. In addition, the company was hit by strong dollars and Bitcoin writedowns.

get rid of bitcoin

Tesla bought bitcoin for $1.5 billion at the beginning of 2021. The company states that by the end of the second quarter, it had exchanged 75 percent of the value into fiat currency. This contributed $936 million to the cash balance.

The company does not mention the size of the reduction associated with the cryptocurrency. Credit Suisse previously estimated that the company will have to write 475 million dollars, equivalent to 4.7 billion kroner.

Bitcoin price fell sharply in the wake of the news. Bitcoin now costs $23,125, nearly $600 less than it was before the news broke. At the same time, the share of the cryptocurrency Coinbase fell by more than five percent in trading on Wall Street.

Strong growth is expected to continue

Tesla still expects nearly 50 percent growth in electric vehicle deliveries in the coming years.

The company wrote that “the rate of growth will depend on equipment capacity, plant uptime, operating efficiency and the capacity and stability of the supply chain.”

The company also adds that it will take some time to speed up production at the new plants in Austin, Texas and Berlin.

In May, Elon Musk called the new factories a “giant money laundering” due to the small number of cars currently produced there, according to luck.