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Tesla bucks global chip shortage with record revenue

Tesla posted record revenue and profits in the third quarter, as it bucked the global computer chip shortage to supply its electric vehicles to a rapidly growing mainstream market.

The company posted a net profit of $1.6bn for the quarter, its highest ever, which comes just three months after it posted its first $1bn-plus quarterly profit since its founding in 2003.

Net profit soared 389 per cent from the previous year, while quarterly revenue rose 57 per cent to $13.8bn, slightly below estimates but still a record for the company.

“We achieved our best-ever net income, operating profit and gross profit,” Tesla said.

The electric car maker said that its operating margins, at 14.6 per cent, were up 5.3 per cent from a year ago and had exceeded its medium-term guidance of a “low-teens” figure.

Tesla had already reported two weeks ago that it had delivered a record 241,300 vehicles in the quarter, a gain of 72 per cent from a year earlier. The jump was particularly notable given the havoc that chip shortages have wreaked on the production schedules of larger carmakers.

General Motors’ US vehicle deliveries fell 32.8 per cent in the past quarter from a year ago, a drop the carmaker blamed on the supply of semiconductors.

Alyssa Altman, mobility lead at Publicis Sapient, a consultancy, said Tesla was proving it could be “more nimble navigating the chip shortage and overall supply chain issues” thanks to its software-first culture and simpler product line.

The pace of production at Tesla is expected to increase as its Shanghai factory increases the scale of its operations. Elon Musk, Tesla chief executive, has pledged that its factory in Berlin would begin producing cars as early as next month, while its facility in Texas is also adding capacity. The company recently announced it would move its headquarters from Palo Alto, California, to Austin, Texas.

Zack Kirkhorn, chief financial officer, said there had been “an awakening” for electric vehicles recently. “To be frank it’s caught us a little bit off guard,” he said. “We’re not able to increase production capacity faster.”

Tesla warned that it faced “a variety of challenges”, however, including the ongoing chip shortage, “congestion at ports and rolling blackouts”.

It added: “We believe our supply chain, engineering and production teams have been dealing with these global challenges with ingenuity, agility and flexibility that is unparalleled in the automotive industry.”

Tesla’s stock was up 18.6 per cent this year as of Wednesday’s market close, although it was 0.4 per cent lower in after-hours trading.

The market value of Tesla is more than $850bn, hundreds of billions of dollars more than that of Toyota, GM or Volkswagen — groups that routinely produce about 10m vehicles a year each but which have struggled to match Musk’s operation on battery performance and brand appeal.

The average sales price of a Tesla vehicle dropped by 6 per cent in the quarter as the company looks to popularise its electric vehicles across the US and around the world.

The sale of regulatory credits — in which Tesla sells zero-emission credits from various governments to other carmakers — accounted for $279m in revenue, down from $397m a year ago.

Tesla, which purchased $1.5bn of bitcoin in February with the hopes of accepting the cryptocurrency as a payment method, posted a bitcoin impairment of $51m in the quarter. The volatile currency hit a record high earlier on Wednesday, likely diminishing concerns about its place in Tesla’s cash reserves portfolio.

Kirkhorn said Tesla had an opportunity to expand profit margins by exploiting its advantages in software and rolling out its “full self-driving” package — a controversially named driver-assist feature — to more customers. The package costs $10,000 upfront or $199 a month.

“The business up until this point has largely been a hardware automotive business with a little bit of software on top of that,” Kirkhorn said. “As full self-driving matures, as take rates increase, if we are to raise prices on that, there’s considerable upside.”


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