Tesla has announced a record $3.3bn profit in the first quarter of 2022 but the company has also said that factories will run below capacity for the rest of this year.
The profit is $438m higher compared to the first three months of last year and it’s the largest profit in one quarter since the start of the company.
Tesla said its total revenue in the first quarter was $18.8bn compared to $10.4bn the previous year, with profits going above and beyond the expectations of investors, according to The New York Times.
The company was the carmaker that expanded the fastest last year – it almost doubled its sales, reaching nearly one million vehicles as the car industry as a whole slowed down.
If the company can find a way through some mounting obstacles, new factories close to Austin, Texas and Berlin may help the company reach similar growth levels this year.
The challenges facing the company include a shortage of semiconductors that have frustrated carmakers for over a year. As China put in place severe measures to contain the Covid-19 pandemic, the company had to close its factory in Shanghai.
A quarter of Tesla’s sales last year were made in China. The Shanghai factory also sent cars on to other Asian countries as well as the European market.
On Wednesday, Tesla said it had restarted “limited production” at the Shanghai factory. But the company also noted that they will have to handle “persistent” supply chain issues and increasing costs for materials.
“Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through the rest of 2022,” the company said in a statement.
CEO Elon Musk said during a conference call on Wednesday that his “best guess” was that Tesla would make 1.5 million cars this year. This would meet Tesla’s goal of increasing sales by 50 per cent a year.
Ahead of the earnings announcement, Wedbush Securities analysts told clients that “a robust demand story for Tesla is being 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”.
Mr Musk noted that higher lithium prices had led the company to raise its own prices, which could slow down the speed at which consumers switch to electric vehicles. He added that some producers of lithium have profit margins and 90 per cent.
“Can more people please get into the lithium business?” he said. “Do you like minting money? Then the lithium business is for you.”
Mr Musk indicated that Tesla may step in to solve some of its own supply chain issues, but he didn’t say if the company would directly enter the lithium business.
“We are looking at all the raw materials and looking carefully,” he said. “We think we will have some exciting announcements in the months to come.”
While Tesla is the largest maker of battery-powered vehicles by a large margin, more traditional carmakers such as Volkswagen, Ford, and Hyundai have begun making models to challenge Tesla.
Tesla sold 310,000 vehicles in the first quarter of this year – a rise of nearly 70 per cent compared to last year.
But there’s a risk that Mr Musk may push away some potential buyers with his attempts to buy Twitter – while some may welcome Mr Musk as a free-speech hero, others may worry that the platform will open up to hate speech and misinformation. During the conference call on Wednesday, Mr Musk wasn’t asked, and didn’t speak about, his possible Twitter takeover.
