Photo Credit: Aly Song | Reuters
Tesla sales have fallen, falling lower than in the first three months of this year, amid another surge of Covid cases across China. Chinese authorities imposed lockdowns in response to an increase in Covid cases, preventing profit from entering.
The recent record by the company marked the first time since 2020 that Tesla did not reach record-high profits.
Tesla earned $3.7 billion in the first quarter, but recent records show only $2.6 billion in earnings. The company also reported $16.9 billion in revenue, a 10% decrease from the first quarter. Despite these declines, the figures are still better than a year ago.
According to Refinitiv analysts, Tesla’s reported figures are higher than expected. They are, however, slightly under the company’s expectations.
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Tesla’s bitcoin investment helped the company
Tesla has also stated that over 75% of the company’s bitcoin holdings have been sold, resulting in an additional $936 million in cash. Despite the fluctuating value of Bitcoin in recent months, the company has reaped significant benefits from its holdings, according to CFO Zachary Kirkhorn.
According to the company’s CEO, Elon Musk, the sale of bitcoins was implemented to compensate for potential losses caused by the lockdown of their Shanghai facility.
Musk and other investors met where the CEO said, “So it was important for us to maximize our cash position, given the uncertainty of the Covid lockdowns in China. We are certainly open to increasing our bitcoin holdings in the future, so this should not be taken as some verdict on bitcoin.”
Tesla’s interest in Bitcoin holdings began last February, when the company invested $1.5 billion. So far, Bitcoin has lost 50% of its value by 2022.
During the conference call, investors questioned Musk about the amount of time he could devote to the company, as well as his future role at Tesla. This comes after the CEO caught the media’s attention following a Twitter contract.
“I’m committed to the long-term,” Musk said to the investors during the call. “I’ll work at Tesla as long as I can usefully advance the cause of sustainability and autonomy.”
Tesla’s Shanghai plant is currently closed due to lockdowns imposed by authorities in response to an unexpected surge in Covid cases in recent weeks. The lockdowns have also hurt car sales, which is the world’s largest market.
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Newly-installed plants could help company address problems
The company established a factory in Texas earlier this year, as well as one in Germany in March of last year. However, production in the plants has been impacted by other factors. Due to supply chain disruptions, the production team experienced issues, prompting Musk to reveal that the plants they recently opened can only produce a “puny” amount of output.
The recent call, on the other hand, praised the two plants. According to the company, the German plant “reached an important milestone of producing over 1,000 cars in a single week while maintaining a positive gross margin during the quarter.”
“But in spite of all these challenges, it was one of the strongest quarters in our history,” Musk said with confidence. He added that Tesla has “the potential for a record-breaking second half of the year.”
“The past [few] years have been quite a few force majeures,” the executive cautioned.
Tesla intends to boost sales by more than 50%. Musk stated at the start of the year that he expected the company to exceed its target. Tesla would have to increase production by more than 75% during the second half of this year for this to happen.
CFO Kirkhorn revealed that Tesla is doing everything possible to meet its goal, although it “has become more difficult, but somehow it remains possible with strong execution.”