Tesla says new factories will need time to ramp up, posts record revenues

A Tesla vehicle drives past Tesla’s main vehicle plant after CEO Elon Musk announced he was challenging local government restrictions on coronavirus disease (COVID-19) by reopening the Fremont plant, California, USA, May 11, 2020. REUTERS / Stephen Lam / File Photo

Oct. 20 (Reuters) – Tesla Inc (TSLA.O) on Wednesday said its upcoming factories and headwinds in its supply chain would put pressure on its margins after beating Wall Street expectations for third quarter revenue thanks to record deliveries.

The world’s most valuable automaker weathered the pandemic and global supply chain crisis better than its rivals, posting record revenues for the fifth consecutive quarter from July to September, fueled by increased production in its Chinese factory.

But the company run by billionaire Elon Musk faces challenges of growing earnings in the coming quarters due to supply chain disruptions and the time it takes to ramp up production at new factories in Berlin and the United Kingdom. Texas.

“There is a whole execution journey ahead of us,” said CFO Zachary Kirkhorn, referring to the new factories.

Fluctuations in the prices of raw materials such as nickel and aluminum have created an “uncertain environment regarding the cost structure,” he added.

Despite this, he said Tesla was “quite ahead” of its plan to increase deliveries by 50% this year.

“Fourth quarter production will be highly dependent on parts availability, but we are aiming for continued growth,” he said.

Tesla shares, up about 23% this year, fell about 0.6% in extended trading on Wednesday night.

Musk himself was not present at the quarterly earnings call for the first time, a development that may have disappointed investors keen to hear the famous CEO’s final thoughts. Read more

Third-quarter revenue reached $ 13.76 billion from $ 8.77 billion a year earlier, slightly exceeding analysts’ expectations according to IBES data from Refinitiv.

Tesla’s automotive gross margin, excluding environmental credits, rose to 28.8%, from 25.8% in the previous quarter.

Tesla’s overall average price fell as it sold more cheaper Model 3 and Model Y cars, but it raised prices in the United States.

The company saw strong sales in China, where its low-cost Shanghai factory overtook the Tesla factory in Fremont, Calif., In terms of production.

Tesla has also announced plans to use lithium iron phosphate (LFP) battery chemistry, which is cheaper than traditional batteries but offers less range, in entry-level models sold outside of China. Analysts said it would help cut costs and address shortages.

He expected the first vehicles with his own 4680, larger battery cells, to be delivered early next year, although he did not say which model would have them. Musk said in September last year that using his own cells would allow Tesla to offer a $ 25,000 car in three years.

In the third quarter, Tesla reported $ 279 million in revenue from the sale of environmental credits, the lowest level in nearly two years. The company sells its excess environmental credits to other automakers trying to comply with regulations in California and elsewhere.

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Reporting by Hyunjoo Jin in San Francisco and Subrat Patnaik in Bengaluru; Editing by Matthew Lewis and Stephen Coates

Our standards: Thomson Reuters Trust Principles.

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