Tesla’s profits jumped in the first quarter but challenges loom

Tesla said on Wednesday it made $3.3 billion in profit in the first three months of the year, up from $438 million a year earlier, but the company also said it expected more. that its factories are operating below capacity for the remainder of 2022.

The electric car maker said its first-quarter revenue was $18.8 billion, up from $10.4 billion a year earlier. The profit far exceeded investors’ expectations.

Tesla was the fastest growing major automaker last year, nearly doubling sales to nearly a million vehicles as the industry as a whole slumped. New plants near Austin, Texas and Berlin allow the company to repeat that growth this year, if it can overcome serious challenges.

These include a shortage of semiconductors that has plagued automakers for more than a year. Tesla also had to close its Shanghai factory due to China’s draconian attempts to contain the coronavirus. China accounted for a quarter of Tesla’s sales last year, and the Shanghai plant also exports cars to other countries in Asia and Europe.

Tesla said on Wednesday it had resumed “limited production” in Shanghai after a three-week shutdown. But he warned he continued to face “persistent” supply chain issues as well as rising raw material costs.

“Our own factories have been operating below capacity for several quarters as the supply chain has become the primary limiting factor, which is expected to continue through the end of 2022,” Tesla said in a statement.

Analysts said supply chain and production issues could hamper the company’s growth this year. Tesla said it aims to increase vehicle sales by around 50% per year for years to come.

“A robust demand story for Tesla is overshadowed by brutal production issues in China as well as a Rubik’s cube supply chain, which continues to haunt Tesla as well as the rest of the auto/tech industry,” said Wedbush Securities analysts in a statement. note to customers ahead of Tesla’s first quarter earnings announcement.

Tesla remains by far the largest maker of battery-powered cars. In the first three months of 2022, it sold 310,000 vehicles, an increase of almost 70% over the previous year. But mainstream automakers like Volkswagen, Ford Motor and Hyundai Motor have woken up to the threat and started selling models that challenge Tesla’s dominance.

There is also a risk that Elon Musk, the chief executive of Tesla, will alienate some car buyers with his high-profile offer to buy Twitter. Some potential clients may applaud Mr. Musk as a champion of free speech, but others may worry that he is opening up Twitter to hate speech and misinformation.

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