Tesla profits dip in Q2 due to China lockdowns

SAN FRANCISCO: Amid supply chain disruptions and extended Covid-19 lockdowns in China, Elon Musk-owned electric vehicle company Tesla has reported $16.9 billion in revenue for the second quarter (Q2), down from $18.8 billion in the first quarter (Q1) this year.

Tesla reported $2.3 billion in second-quarter profit, below its record quarterly profit of $3.3 billion in the first quarter this year.

The company reported its first sequential decline in quarterly profit in more than a year.

As of the end of the second quarter, the company said it has converted approximately 75 per cent of its Bitcoin purchases into fiat currency. Conversions in the second quarter added $936 million in cash to the company's balance sheet.

"We continued to make significant progress across the business during the second quarter of 2022," the company said in its second-quarter earnings report late on Wednesday.

"Though we faced certain challenges, including limited production and shutdowns in Shanghai for the majority of the quarter, we achieved an operating margin among the highest in the industry of 14.6 per cent, positive free cash flow of $621 million..." it added.

The company, however, ended the quarter with the highest vehicle production month in its history.

The electric car company said it earned $2.3 billion, or $1.95 a share, in the second quarter, compared with $1.1 billion, or $1.02 a share, a year ago.

Tesla mentioned that in the second quarter, the services and other business returned to a positive gross margin. The used car business remains strong, particularly as interest in electric vehicles expands.

Additionally, the company said it is growing merchandise, Tesla-owned collision centers and related services.

The Supercharger business, which is part of Services and Other, is increasingly serving both Tesla and non-Tesla customers.

"We plan to grow our manufacturing capacity as quickly as possible. Over a multi-year horizon, we expect to achieve 50 per cent average annual growth in vehicle deliveries," the company said.

"The rate of growth will depend on our equipment capacity, factory uptime, operational efficiency and the capacity and stability of the supply chain," it added.

Following the report, shares slightly increased in after-hours trading.

Earlier in July, the electric carmaker announced it delivered 2,54,695 electric vehicles globally in the second quarter of 2022. It also said that June 2022 was the highest vehicle production month in Tesla's history.

Meanwhile, in the first quarter of 2022, Tesla delivered 3,10,048 electric vehicles.