Tesla hits record profit despite parts shortage, ship delays

Oct 20, 2021, 1:30 PM | Updated: Oct 21, 2021, 12:19 am

DETROIT (AP) — Record electric vehicle sales last summer amid a shortage of computer chips and other materials propelled Tesla Inc. to the biggest quarterly net earnings in its history.

The company said Wednesday that it made $1.62 billion in the third quarter, beating the old record of $1.14 billion set in the second quarter of this year. The profit was nearly five times larger than the $331 million Tesla made in the same quarter a year ago.

Revenue of $13.76 billion from July through September also set a record, but it fell short of Wall Street expectations of just over $14 billion, according to FactSet.

Excluding special items such as stock-based compensation, Palo Alto, California-based Tesla made $1.86 per share, beating analyst estimates of $1.62. CEO Elon Musk has said he’s moving the headquarters to Austin, Texas, the dateline of Wednesday’s earnings release.

Some of the quarterly profit, though, came from selling regulatory credits to other automakers. Tesla made $279 million on credits during the quarter.

“A variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed,” the company said in a statement to shareholders.

Earlier this month Tesla said it delivered a record 241,300 electric vehicles in the third quarter even as it wrestled with the shortages that have hit the entire auto industry. Most automakers reported sales declines in the U.S. last quarter due to chip and other shortages, including General Motors and Ford.

Previously, Musk has said Tesla kept its manufacturing lines running largely by finding chips from alternate suppliers and then scrambling to rewrite some of the software in its cars to ensure all the technology remained compatible.

Third-quarter sales rose 72% over the 140,000 deliveries Tesla made for the same period a year ago.

So far this year, Tesla has sold around 627,300 vehicles. That puts it on pace to soundly beat last year’s total of 499,550.

While sales grew in the third quarter, the average sales price fell 6% because Tesla is selling more less-expensive Models 3 and Y and fewer pricier Models S and X.

Tesla also took an impairment charge of $51 million due to a decline in value of its Bitcoin holdings.

Musk didn’t appear on this quarter’s conference call with with analysts and investors. He said previously that he would show up only when he had something important to say.

That left Chief Financial Officer Zachary Kirkhorn and Vice President of Vehicle Engineering Lars Moravy to answer questions.

Kirkhorn said the company was able to hit an operating margin — how much it makes pretax after variable production costs — of just under 15%.

But Kirkhorn said Tesla may face some difficulties in the future that could threaten that margin, including rising commodity prices and labor shortages. Tesla’s biggest cost exposure is for nickel, which goes into battery cells, and aluminum, which the company uses for other nonbattery components, he said. Tesla also will face inefficiencies as it starts production at new factories in Texas and Germany next year, he said.

The company already is seeing commodity cost increases, which have resulted in price hikes, Kirkhorn said. Next year it’s possible that Tesla will see more. “It’s difficult to say precisely, but the volatility and the increases are just so substantial,” he said.

Tesla executives also made their first public comment on multiple investigations of the company by U.S. safety regulators. Moravy said Tesla is cooperating as much as possible.

The National Highway Traffic Safety Administration has opened an investigation into why Tesla’s Autopilot driver-assist system keeps running into parked emergency vehicles. Of the dozen crashes that are part of the probe, 17 people were injured and one was killed.

The safety agency also is questioning why Tesla didn’t recall vehicles with Autopilot when it did an over-the internet software update so they better recognize firetrucks and police cars in low light. NHTSA said the update addressed a safety defect.

Kirkhorn said safety is important to Tesla as the auto industry transitions from traditional cars to being more software-oriented. “Regulatory bodies, and understandably so, are interested in understanding how to regulate in this environment, and NHTSA is no exception,” he said. “Were excited to partner and we’ll work collaboratively with all the different regulatory bodies.”

Tesla hasn’t always cooperated with the safety agency, though. In January, Tesla resisted a request from NHTSA to recall about 135,000 vehicles because their touch screens could go dark. The agency said the screens were a safety defect because backup cameras and windshield defroster controls could be disabled.

A month later, after NHTSA started the process toward holding a public hearing and taking Tesla to court, the company agreed to the recall.

In its shareholder statement, Tesla also said that construction of its new factory near Austin is progressing as planned and it’s preparing equipment and “fabricating our first pre-production vehicles.”

The factory, which is centrally located versus Tesla’s other assembly plant in Fremont, California, will send Model Y small SUVs and new Cybertruck pickups to East Coast population centers.

Tesla said it expects to expand its factory capacity quickly, and over a “multi-year horizon” it expects sales to grow an average of 50% annually.

Shares of Tesla Inc. fell 1.6% to $851.80 in after-hours trading Wednesday.

____

This story has been corrected to show that Tesla made a $331 million net profit in the third quarter of 2021, not $300 million.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Turkey’s annual inflation hits new 24-year high at 83.45%

ANKARA, Turkey (AP) — Turkey’s annual inflation reached a new 24-year high of 83.45% in September, according to official data on Monday, pushing the cost of essential goods higher and further hitting households already facing high energy, food and housing costs. The Turkish Statistical Institute said consumer prices rose by 3.08% from the previous month. […]
1 hour ago
FILE - The Twitter page of Elon Musk is seen on the screen of a computer in Sausalito, Calif., on M...
Associated Press

What if Musk loses the Twitter case but defies the court?

Twitter wants a Delaware court to order Elon Musk to buy the social media service for $44 billion, as he promised back in April. But what if a judge makes that ruling and Musk balks? The Tesla billionaire’s reputation for dismissing government pronouncements has some worried that he might flout an unfavorable ruling of the […]
1 hour ago
Chancellor of the Exchequer Kwasi Kwarteng speaking to the media ahead of the Conservative Party an...
Associated Press

UK scraps tax cut for wealthy that sparked market turmoil

BIRMINGHAM, England (AP) — The British government has dropped plans to cut income tax for top earners, part of a package of unfunded cuts that sparked turmoil on financial markets and sent the pound to record lows. In a dramatic about-face, Treasury chief Kwasi Kwarteng said Monday that he would abandon plans to scrap the […]
1 day ago
Japan’s Prime Minister Fumio Kishida delivers a policy speech in Tokyo Monday, Oct. 3, 2022. (Sad...
Associated Press

Japan’s Kishida vows to regain trust in church controversy

TOKYO (AP) — Japan’s Prime Minister Fumio Kishida said Monday that he will humbly listen to people’s “harsh voices” criticizing his governing party’s cozy ties to the ultra-conservative Unification Church and help victims of its allegedly fraudulent businesses and huge donation collection. Kishida has come under fire in a widening scandal that has exposed decades […]
1 day ago
FILE - A Tuesday, Dec. 8, 2020 file photo of a Nobel medal displayed during a ceremony in New York....
Associated Press

Nobel panel to announce winner of medicine prize

STOCKHOLM (AP) — The winner, or winners, of the Nobel Prize in physiology or medicine will be announced Monday at the Karolinska Institute in Stockholm, Sweden. Among the researchers who may be honored this year are those who were instrumental in the development of the mRNA technology that went into COVID-19 vaccines, which saved millions […]
1 day ago
The Pittsburgh Steelers face the New England Patriots during an NFL football game at Acrisure Stadi...
Associated Press

Spectator at Steelers game dies after fall from escalator

PITTSBURGH (AP) — A spectator at Sunday’s game between the Pittsburgh Steelers and New York Jets died following a fall on an escalator at Acrisure Stadium. The Pittsburgh Department of Public Safety said police and emergency service personnel were alerted after a male spectator fell around 4:45 p.m., shortly after the end of New York’s […]
1 day ago

Sponsored Articles

...
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
...
Sanderson Ford

Don’t let rising fuel prices stop you from traveling Arizona this summer

There's no better time to get out on the open road and see what the beautiful state of Arizona has to offer. But if the cost of gas is putting a cloud over your summer vacation plans, let Sanderson Ford help with their wide-range selection of electric vehicles.
...
Dr. Richard Carmona

Great news: Children under 5 can now get COVID-19 vaccine

After more than two years of battle with an invisible killer, we can now vaccinate the youngest among us against COVID-19. This is great news.
Tesla hits record profit despite parts shortage, ship delays