Tesla revenues got off to a strong start in 2021, thanks to a successful production increase in China and continued robust demand for its electric cars in a more crowded market, according to figures disclosed after the market closed on Monday.
But Wall Street’s attention fell instead on the profit margins in the company’s core automotive business, which came in below expectations as it registered higher supply chain costs and lower average selling prices due to model transitions. Tesla’s shares slipped back more than 2 per cent in after-market trading.
At 93 cents a share, up from 23 cents a year before, pro forma earnings came in ahead of the 79 cents Wall Street had been expecting. But the figure reflected a number of one-off factors, including a jump in income from the sale of regulatory credits, to $518m from $354m in the same period a year ago.
Tesla’s recent decision to invest part of its spare cash in bitcoin also lifted profits, with sales of the cryptocurrency adding $101m to the bottom line.
The solid demand for Tesla’s cars was confirmed earlier this month when it reported vehicle deliveries of 184,800 in the first quarter, some 10 per cent ahead of expectations. That was despite a slump of more than 80 per cent in sales of the older Model S and X ahead of the launch of new versions of the cars.
The buoyant deliveries lifted Tesla’s revenue to $10.39bn, up from just under $6bn the year before.
The low sales of its older and most profitable models, however, was one factor clouding the profit picture at an unusually complicated moment for the company, and Tesla said its average selling prices had fallen as a result. The chip shortages faced by the entire car industry have been another concern for investors, and come at a time when Tesla is already facing challenges gearing up its supply chain to handle new models and production facilities.
Other factors complicating the picture include preparations for the start of production at new plants in Berlin and Texas this year, the recent introduction of the Model Y in China, and the planned launch of pick-up and semi trucks.
For the first quarter, most analysts had expected Tesla to report a gross profit margin from automotive operations that was roughly in line with the 24.1 per cent of 2020’s fourth quarter. Excluding sales of regulatory credits, the margin came in at 22 per cent.
Adjusted earnings before interest, depreciation and amortisation reached about $1.84bn, double the level seen a year before and in line with expectations.
Based on formal accounting principles, Tesla reported net income of $438m, or 39 cents a share, up from $16m the year before. The figure was struck after deducting $299m paid to chief executive Elon Musk under a controversial stock compensation plan adopted in 2018. That followed $267m in stock Musk was handed under the plan in the final quarter of 2020.