Tesla’s margins plunge under supply chain pressure

Tesla’s revenue got off to a good start in 2021, thanks to a successful production ramp-up in China and continued robust demand for its electric cars in a more crowded market, according to figures released after the market closed on Monday.

But Wall Street’s focus instead turned to the profit margins of the company’s core auto business, which were lower than expected as they saw higher supply chain costs and selling prices. means lower due to model transitions. Tesla shares fell more than 2% in aftermarket trading.

At 93 cents a share, down from 23 cents a year earlier, pro forma profits exceeded the 79 cents expected by Wall Street. But that figure reflects a number of one-time factors, including an increase in revenue from the sale of regulatory credits, to $ 518 million from $ 354 million in the same period a year ago.

Tesla’s recent decision to invest some of its reserve money in Bitcoin also boosted profits, with sales of the cryptocurrency adding $ 101 million to the bottom line.

Strong demand for Tesla cars was confirmed earlier this month when it announced first quarter deliveries of 184,800 vehicles, about 10% ahead of expectations. This was despite an over 80% drop in sales of older S and X models before new versions of the cars were launched.

Sustained deliveries took Tesla’s revenue to $ 10.39 billion, from just under $ 6 billion the year before.

Low sales of its older, more profitable models, however, were a factor clouding the profit picture at an unusually complicated time for the company, and Tesla said its average selling prices had fallen as a result. the chip shortages facing the entire auto industry has been another concern for investors, and comes at a time when Tesla is already facing challenges in preparing its supply chain to handle new models and installations. of production.

Other complicating factors include preparations to start production at new factories in Berlin and Texas this year, the recent introduction of the Model Y in China, and the planned launch of pickup trucks and semi-trailers.

For the first quarter, most analysts expected Tesla to report an automotive gross profit margin that was roughly 24.1% in the fourth quarter of 2020. Excluding regulatory credit sales, the margin was around 24.1%. establishes at 22 percent.

Adjusted earnings before interest, depreciation and amortization reached approximately $ 1.84 billion, double the level seen a year earlier and in line with expectations.

Based on formal accounting principles, Tesla reported net income of $ 438 million, or 39 cents per share, from $ 16 million the year before. The figure was reached after the $ 299 million deduction paid to CEO Elon Musk as part of a controversial stock compensation plan passed in 2018. This follows the $ 267 million in stock, Musk was handed over. as part of the plan in the last quarter of 2020.

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