Tesla reports record profit but warns of constraints on supply chain

Tesla reported a record net profit of $2.3bn in the fourth quarter of 2021 but warned that constraints in its supply chain would weigh on its results “through 2022”.

The US-based electric carmaker on Wednesday said its quarterly revenue jumped 65 per cent from the same period a year before to $17.7bn, well above forecasts of $16.6bn. 

But net quarterly profit was below the $2.55bn expected by Wall Street, sending Tesla’s shares down more than 5 per cent in immediate after-hours trading. The shares subsequently reversed course and were trading flat. The profit figure was 760 per cent higher than the fourth quarter of 2020.

High expectations had built up after Tesla reported earlier this month that it delivered more than 308,000 vehicles in the fourth quarter — blowing past analysts’ forecasts of 263,026.

Those figures demonstrated that the electric vehicle pioneer led by Elon Musk had deftly navigated the supply chain congestion and chip shortages that have plagued the rest of the car industry.

But on Wednesday, Tesla said its factories “have been running below capacity for several quarters as [the] supply chain became the main limiting factor, which is likely to continue through 2022”.

It added: “We aim to increase our production as quickly as we can, not only through ramping production at new factories in Austin [Texas] and Berlin, but also by maximising output from our established factories in Fremont [California] and Shanghai. We believe competitiveness in the EV market will be determined by the ability to add capacity across the supply chain and ramp production.”

Tesla had only achieved its first profitable year in 2020, with a $721m net profit. For all of 2021 it recorded $5.5bn in net profit, up 665 per cent.

Tesla’s operating margins were 14.7 per cent, up less than 1 percentage point from a year ago.

Adjusted earnings per share, a crucial metric for Wall Street, were $2.54, versus the $2.37 expected by analysts, reflecting a gain of 218 per cent from a year before.

Despite the headwinds, the company called 2021 a “breakthrough year”, adding: “With our deliveries up 87 per cent in 2021, we achieved the highest quarterly operating margin among all volume (carmakers), based on the latest available data, demonstrating that EVs can be more profitable than combustion engine vehicles.”

Shares of the company, which moved its headquarters from Fremont to Austin last year, had slipped 22 per cent this year, pulling its market capitalisation to $934bn, before Wednesday’s results were released.

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