Tesla’s Profits Jumped in First Quarter, But Challenges Appear

Tesla said Wednesday it made a profit of $3.3 billion in the first three months of the year, up from $438 million a year earlier, but the company also said it expects its factories to operate below capacity for the remainder of 2022.

The electric car maker said its revenue in the first quarter reached $18.8 billion, up from $10.4 billion a year ago. Profit significantly exceeded investor expectations.

tesla It was the fastest-growing major automaker last year, nearly doubling its sales to nearly a million vehicles as the industry as a whole collapsed. new factories nearby Austin, Texasand the Berlin company is positioning that growth to repeat this year if it can overcome some serious challenges.

These include: semiconductor shortage bothering automakers more than a year. Tesla also had to close its factory. Shanghai Due to China’s relentless attempts to contain the coronavirus. China accounted for a quarter of Tesla sales last year, and the Shanghai factory also exports cars to other countries in Asia and Europe.

Tesla said on Wednesday it is continuing “limited production” in Shanghai after a three-week shutdown. However, it warned that it continues to face rising raw material costs as well as “permanent” supply chain problems.

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

Analysts said supply chain and manufacturing issues could hinder the company’s growth this year. Tesla said it aims to increase vehicle sales by about 50 percent per year in the coming years.

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

Tesla remains the largest battery-powered automaker to date. It sold 310,000 vehicles in the first three months of 2022, an increase of almost 70 percent from the previous year. But traditional automakers like Volkswagen, Ford Motor, and Hyundai Motor recognized the threat and began selling models that challenged Tesla’s dominance.

There’s also the risk of alienating some car buyers with Tesla CEO Elon Musk’s high-profile buyout offer. excitement. Some potential customers may applaud Mr. Musk as a free speech champion, but others may fear he’s opening Twitter to hate speech and misinformation.