6 December 2021

Tesla Posts Record Quarterly Earnings on Supply-Chain Resilience

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Tesla Inc. notched a third consecutive record quarterly profit, thanks in part to the electric-vehicle maker’s ability to navigate persistent global supply-chain disruptions.

The car maker reported a $1.6 billion third-quarter profit, up from $331 million a year earlier, on record revenue of $13.8 billion. The results beat Wall Street expectations of a profit of around $1.3 billion and $13.6 billion in revenue.

The strong earnings came after Tesla delivered around 241,300 vehicles to customers in the three months ended in September, up roughly 73% from a year earlier, despite parts shortages that have hindered auto makers this year. Underpinning that growth was an uptick in sales of vehicles made in China, now home to Tesla’s largest auto plant by output.

“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,” Tesla said in its earnings release.

Tesla is more vertically integrated than many auto makers, helping the company navigate the chip shortage more smoothly than some of its competitors, analysts said. “Tesla has a better ability to pivot in chip sourcing, given its software lead,” Credit Suisse Group AG analyst Dan Levy said in a recent note to investors.

Analysts expect Tesla’s vehicle deliveries to continue to climb in the current quarter to around 266,000, according to FactSet—positioning the company to hand over nearly 900,000 vehicles to customers in 2021. The company has said it is aiming to increase deliveries by more than 50% over last year’s total of nearly half a million vehicles.

Tesla shares have soared in recent weeks, closing Wednesday around $866, near their record close of $883.09 in January. The stock fell less than 1% in after-hours trading after the company posted results.

Finding workarounds to parts shortages hasn’t come cheaply, however.

“We are seeing significant cost pressure in our supply chain,” Chief Executive Elon Musk said at the company’s annual shareholders’ meeting earlier this month. “The sheer amount of money we’re spending on flying parts around the world is just not great but hopefully temporary.”

Mr. Musk also suggested at the meeting that parts shortages were contributing to Tesla product delays. The company has postponed the rollout of its Cybertruck pickup by about a year. Production is now likely to start in late 2022. Output of the company’s long-delayed semitrailer truck, originally due in 2019, has been pushed back even further—to 2023.

“We were just basically limited by multiple supply-chain shortages, like so many supply chains of so many types, not just chips,” Mr. Musk said.

It isn’t known whether Mr. Musk, a mainstay of Tesla’s earnings calls, will make an appearance on Wednesday. The billionaire, who also runs Space Exploration Technologies Corp. and has complained about his workload, said in July that he would no longer be participating in such calls by default.

Tesla is aiming to lay the groundwork for growth by opening two new vehicle factories by the end of the year, one in the Austin, Texas, area, where the company is moving its headquarters; the other outside Berlin.

Tesla said it was in the process of fabricating its first preproduction vehicles in Texas and expected to receive final permit approval before the end of the year for its factory in Germany. The company said it aimed to start regular production of Model Y vehicles at both sites before year-end.

The company, meanwhile, is facing increased scrutiny of its advanced driver-assistance tools, which help with tasks such as navigating within a lane on the highway.

Last week, the National Highway Traffic Safety Administration, the federal auto-safety regulator, voiced concern that a lack of transparency related to such features—which don’t make vehicles autonomous—could undermine safety oversight. The agency opened an investigation into Tesla’s Autopilot driver-assistance system in August after a series of crashes involving Teslas and one or more parked emergency vehicles.

Tesla hasn’t responded to requests for comment about the probe. NHTSA, as part of its investigation, has asked Tesla to provide volumes of information about its advanced driver-assistance technology. The first batch of data is due to NHTSA on Friday.

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