Amid supply chain constraints and production delays in China, Tesla said it made a profit of $3.3 billion in the first quarter of 2022.
Tesla once again posted record profits, despite supply chain issues that have plagued the entire auto industry. The American company therefore blew up Wall Street analysts’ forecasts for the first quarter of 2022 by realizing a profit of 3.3 billion dollars (3 billion euros) on just over 18.7 billion dollars in revenue.
Tesla has therefore almost achieved the feat of doubling its profits compared to the same quarter last year. In fact, it represents an 81% increase year over year, compared to $10.4 billion in revenue for the first quarter of 2021. Shares of the company immediately jumped more than 6%. This probably made Elon Musk very happy, who recently expressed his intention to buy Twitter.
Tesla posts record first-quarter sales
Tesla built more than 305,000 vehicles in the “unusually difficult” first quarter of this year, delivered more than 310,000. As a reminder, this is a record for the company. By comparison, in the same quarter last year, Tesla shipped just 185,000 cars. Tesla took the opportunity to confirm that its order rate jumped following this year’s Super Bowl, which was the opportunity for many manufacturers to promote their electric vehicles.
Tesla sales figures are expected to explode within months, Tesla having opened new factories in Berlin and Austin. Model Ys for the European market, for example, are now manufactured at the new Gigafactory in Germany, which recently officially started production at the end of March.
Still, Tesla expects its new factories won’t be operating at 100% capacity this year. ” Our factories have been operating below capacity for several quarters as the supply chain has become the main limiting factor, which is expected to continue through the end of 2022 said Tesla.
Tesla continues to face production issues globally
Despite record deliveries and profits, Tesla reported continued difficulties around its supply chain during the quarter, which limited its ability to run its factories at full capacity, including chip shortages, COVID-19 outbreaks, and the multiplication of the price of certain raw materials due to inflation. Tesla also reported rising retail prices, partly due to rising production costs and difficulties in sourcing certain key components.
Indeed, the automotive sector has been affected for several years now by the global shortage of semiconductors. This had, for example, pushed the manufacturer to deliver Tesla Model 3 and Y without a USB port, or to remove the mobile charger which was supplied free of charge with the cars.
The COVID-19 pandemic also paralyzed production lines for several months in 2020, but is again impacting the company as cases of contamination increase in China. Indeed, the workers of the Shanghai Gigafactory are forced to sleep there if they want to continue working because of the restrictions imposed by the Chinese government. Faced with the resurgence of COVID-19, the latter had decided to apply a Zero COVID policy, and therefore to put in place a total containment of the population and close many businesses.
Finally, the American automaker is affected by sharp increases in commodity prices. These are on the rise because of inflation, but above all because of the current global geopolitical situation. The war in Ukraine has significantly increased the price of cars. As Russia is one of the main suppliers of metals such as nickel, its price has exploded in recent weeks. Tesla clarified in its report that it was not immediately affected by the rising cost of raw materials, but that cost pressure had increased upon expiry of its current contracts with its suppliers.