Tesla earnings fall on hit from China Covid surge
By Chris Isidore, CNN BusinessUpdated: Wed, 20 Jul 2022 20:56:11 GMTSource: CNN BusinessLockdowns caused by the Covid surge in China caused sales and profits to fall at Tesla compared to the first thr
By Chris Isidore, CNN BusinessUpdated: Wed, 20 Jul 2022 20:56:11 GMT
Source: CNN Business
Lockdowns caused by the Covid surge in China caused sales and profits to fall at Tesla compared to the first three months of the year, the first time since the pandemic surfaced in early 2020 that the company did not report a record profit.
Tesla reported adjusted income of $2.6 billion in the second quarter, down from the $3.7 billion in the first quarter, but $1 billion more than it earned a year earlier. Revenue of $16.9 billion in the quarter fell 10% from the first quarter, but was up 42% from a year ago.
Earnings were better than forecast by analysts surveyed by Refinitiv, while revenue was slightly below expectations.
The company's factory in Shanghai had to halt production for most of the quarter due to mandatory lockdowns in the city to combat a surge in Covid cases. Lockdowns across China also brought sales in the country, the largest market for car sales, to a near halt and disrupted the flow of parts from suppliers whose plants were shut down by Covid measures.
Tesla did open a factory in Texas early in the quarter and another in Germany in late March. But the ramp-up plans for those locations were affected by supply chain problems, prompting CEO Elon Musk to say during a late May interview that the two plants could only achieve a "puny" output of cars that made them "gigantic money furnaces. Right now, there's a giant roaring sound which is the sound of money on fire."
In Wednesday's earning report, the company's view on the output of those two plants was far more positive.
The German plant "reached an important milestone of over 1,000 cars produced in a single week while achieving positive gross margin during the quarter," the company said. Previously, Tesla had said that June was the highest vehicle production month in Tesla's history.
Shares of Tesla were slightly higher in after-hours trading immediately following the report. But the stock is down 30% for the year.
This is a developing story.
