Tesla Inc. (NASDAQ: TSLA) reported its first quarterly profit exceeding a billion dollars in the second quarter as growing vehicle sales soared past the money-making sale of pollution credits the electric vehicle maker has relied upon to post positive results.
Earnings of $1.45 a share beat estimates of 98 cents. Revenue was $11.96 billion versus analyst estimates of $11.30 billion. Net income was $1.14 billion, 10 times higher than a year ago. Automotive revenue of $10.21 billion included only $354 million of regulatory credit sales.
Tesla delivered 201,250 cars in the second quarter ending June 30, and recorded a gross automotive profit margin of 28.4%, higher than in any of the past four quarters. All but 1,890 of those were lower-priced Model 3 and Model Y units.
No mention of Semi
In a conference call discussing the quarter, CEO Elon Musk did not mention theTesla Semi Class 8 truck. The Semi was introduced in 2017 with production targeted for 2019. It has been delayed several more times.
Jerome Guillen, who was overseeing the Semi program, left Tesla in June, renewing questions about when the electric trucks would be seen as more than prototypes.
Now, because a short supply of battery cells is allocated to profitable passenger cars, Musk does not discuss the Semi. He also was vague on production timing for the polarizing but wildly popular Cybertruck pickup, expected to be in production at a new Tesla Gigafactory in Austin, Texas, this year.
Returning to a common concern on the difficulty of manufacturing at scale, Musk said making prototypes and small batches of vehicles is easy but ramping production is “insanely difficult.”
For example, he said the Tesla Gigafactory in Shanghai was completed in a lightning-fast 11 months, but ramping to full production of the Model Y took more than a year.
“It’s going to move as fast as the slowest of the rough-order-of-magnitude of 10,000 unique parts and processes,” Musk said.
Parts availability will drive second-half production
“I think the Cybertruck ramp will be difficult because it’s such a new architecture,” Musk said. “It might be our best product ever, but it has a lot of fundamentally new design ideas. Nobody’s ever really made a car like this before, so there will be challenges because there is so much unexplored territory.”
Tesla Chief Financial Officer Zach Kirkhorn said “volume growth will be determined by part availability” at the new plants in Austin, Berlin and the recently completed Shanghai plant.
“We have the factory capacity ready and are in a strong demand position,” he said.
Despite ongoing shortages of microchips and other parts critical to finishing production, Musk maintained his expectation that Tesla can grow production by at least 50% in 2022.
The positive financials came against a backdrop of negative news, including several recalls in China and the U.S. and a delay in deliveries of the flagship Model S Plaid.