DETROIT (AP) — Tesla’s second-quarter profit fell 32% from record first-quarter levels as supply chain issues and pandemic lockdowns in China slowed production of its electric vehicles.
But the Austin, Texas-based company surprised analysts again on Wednesday with a better-than-expected net profit of $2.26 billion for the quarter. Tesla stuck to a forecast for annual vehicle sales growth of 50% over the next few years, but said that depends on supply chain, equipment capacity and other issues.
The company made a record $3.32 billion in the first quarter of this year.
Tesla’s April-June sales fell to 254,000 vehicles, their lowest quarterly level since last fall. But the company predicted record second-half production and said June saw the highest production month in its history.
Industry analysts had expected lower profits after falling sales figures and CEO Elon Musk’s tweets about laying off 10% of the company’s workforce over fears of a recession. In an interview, Musk described the new factories in Austin and Berlin as “money furnaces” that were losing billions of dollars because supply chain breakdowns limited the number of cars they could produce.
But Tesla beat Wall Street expectations from April to June with adjusted earnings of $2.27 per share. Analysts polled by FactSet had expected $1.81. Revenue was $16.93 billion, beating estimates of $16.54 billion.
Edward Jones analyst Jeff Windau said earnings were better than expected. He noted that lower automotive revenue from the first quarter was offset by better performance from energy storage, solar and services.
Musk reiterated the forecast for annual vehicle sales growth of 50%, but said much depends on circumstances the company may not be able to control.
Windau said the forecast “shows the confidence they have in their ability to grow the electric vehicle market.”
Tesla shares rose 1.5% to $753.40 in extended trading on Wednesday.
The company said it converted 75% of its bitcoin investment into government currency during the quarter, adding $936 million in cash to its balance sheet. It spent $1.5 billion on the investment last year. Overall, it recorded a cost of $106 million for bitcoin, plus additional costs for employee cuts.
CEO Elon Musk said bitcoin holdings were sold to raise funds due to uncertainty over the duration of pandemic lockdowns in China. He said Tesla was open to increasing bitcoin holdings in the future.
Bitcoin price has fallen by around 50% so far this year.
Musk also said Tesla sees indications that inflation may decline as prices for most commodities fall. He cautioned against economic forecasts, but said prices for commodities, such as steel and aluminum, were trending lower.
Musk said Tesla’s “Full Self-Driving” beta test software is set to be released before the end of this year for all North American customers who wish to purchase it. And with regulatory approval, it will be released in Europe and other parts of the world, he said. Despite its name, “Full Self-Driving” can’t drive on its own, and Tesla warns that drivers need to be careful all the time.
Chief Financial Officer Zachary Kirkhorn said the company is “maybe seeing a bit” of the impact on demand due to macro issues. Musk reiterated that Tesla has a vehicle supply problem, not a demand problem, and said it now takes six months to a year to get a new vehicle. He said the company has raised prices to “embarrassing levels” due to inflation, but he hopes to reduce prices a bit.