Tesla reached a record high of deliveries of its electric cars, which contributed to the strong start
that the company had at the beginning of the year. This happened despite facing production problems due to the shortage of computer chips globally, which also affected other carmakers. Tesla’s three-month profit is somewhere around $438, $16 million higher than last year. The bulk of the profit was bolstered by sales of cryptocurrency (bitcoin) and environmental credits.
According to Elon Musk, Tesla’s midsize sedan, Model 3, was the best-selling luxury sedan in the world for the first quarter of 2021. He has also predicted that the midsize sport utility Model Y will be the best-selling car or truck in a few years. In Mr. Musk’s words, “Our demand is the best we have seen, and that’s a result of a real shift in how customers perceive our electric vehicles.” The Model Y has found success in China, where Tesla started manufacturing last year. The electric vehicle market in China has recently enjoyed growth in leaps and bounds, and hundreds of manufacturers are looking to get in. Luckily, Tesla has a presence already.
With all the rave about Tesla’s revenue in the last quarter, not all of the company’s revenue came from car sales. Tesla purchased Bitcoin worth $1.5 billion in the first quarter but cut its position by 10 percent, earning $101 million in additional revenues. Elon Musk has never hidden his support for cryptocurrency, and recently, Tesla introduced a payment method that allows customers to buy cars with Bitcoin. “Our goal is to hold the Bitcoin we currently have and continue to get more from transactions when we sell our cars,” Zachary Kirkhorn, Tesla’s Chief Financial Officer, said.
Tesla also earns credits for exceeding emissions and fuel economy standards which it sells to other carmakers to help them avoid penalties. Tesla’s earnings from selling those credits in the first quarter were about $518 million. In 2020, Tesla delivered about 500,000 cars and 185,000 in the first quarter. The company sees its deliveries increasing by 50% annually with plans to increase its production volume at its facilities in California and Shanghai, China. It’s also building new factories in Texas and Berlin, Germany.
Presently, Tesla leads the pack of valuable car companies in the world, and its share price has been driven mostly by investors betting on the growth of electric vehicles in years to come. This is despite the fact that it doesn’t make as many cars as companies like Toyota and Volkswagen, which sold more than nine million cars each in 2020.
Experts have expressed their skepticism about Tesla’s investment schemes, especially the bitcoin purchase. Opinions in the investment industry allude to the investors capable of buying bitcoins themselves if that was what they wanted. They didn’t need Tesla to do it for them, but other opinions have argued about Tesla never playing by the rules and doing things on its terms.