Photo Credit: Aly Song | Reuters
Tesla sales have dropped significantly and are now lower than they were in the first three months of this year amid an additional uptick in Covid cases across China. Due to the increase in Covid cases, Chinese authorities implemented lockdowns that stopped profit from entering the company.
The recent record was the first time since 2020 that Tesla did not register record-high profits.
Tesla made $3.7 billion in revenue during the first quarter, but according to more recent numbers, it only made $2.6 billion. Furthermore, the business reported $16.9 billion in revenue, a 10% decrease from the first quarter’s total. The figures are still better than they were a year ago, despite these drops.
The figures provided by Tesla exceeded expectations, according to analysts from Refinitiv. They fall just short of what the company had hoped for though.
Bitcoin holdings helped Tesla
More than 75% of Tesla’s bitcoin holdings, according to the company, have been sold, netting it another $936 million in cash. The company has gotten a lot out of its holdings, according to CFO Zachary Kirkhorn, despite the fluctuating value of Bitcoin over the recent months.
Elon Musk, the CEO of the company, said that the decision to sell their bitcoins was made to allow the business to cover any potential losses arising from the closure of their Shanghai plant.
Musk had a meeting with investors where he said, “So it was important for us to maximize our cash position, given the uncertainty of the Covid lockdowns in China. We are certainly open to increasing our bitcoin holdings in the future, so this should not be taken as some verdict on bitcoin.”
Tesla’s $1.5 billion investment in February of last year kicked off the business’s interest in Bitcoin holdings. BTC has lost 50% of its value so far in 2022.
Investors doubted Musk about the level of focus he could give the business as well as his forthcoming position at Tesla during the conference call. Following a deal involving Twitter, the CEO has already caught the media’s eye.
“I’m committed to the long-term,” assured Musk to investors. “I’ll work at Tesla as long as I can usefully advance the cause of sustainability and autonomy.”
The lockdowns instituted by authorities in response to the unexpected rise in Covid cases in recent weeks have caused Tesla’s Shanghai plant to currently stop operating. The largest market in the world for automobiles has suffered as a result of the lockdowns.
New plants could help the company with its problems
Along with opening a factory in Germany in March of last year, the company also did so in Texas earlier this year. Production has, however, been impacted in the plants for other reasons as well. Musk disclosed that the recently opened plants can only produce a “puny” amount of output as a result of production team issues brought on by supply chain disruption.
During the call, though, the two plants were praised. The company remarked that German plant reached an important milestone, producing more than 1,000 cars in a single week while maintaining positive gross margin during the quarter.
“But in spite of all these challenges, it was one of the strongest quarters in our history,” Musk added. According to him, Tesla has “the potential for a record-breaking second half of the year.”
“The past [few] years have been quite a few force majeures,” the company executive cautioned.
The goal for Tesla is a sales increase of more than 50%. Musk predicted that the company would exceed its goal at the beginning of the year. Tesla’s production would need to significantly raise by more than 75% in the second half of this year for this to actually happen.
According to CFO Kirkhorn, Tesla is making every effort to meet its goals, but they have grown more challenging. However, it is still attainable with strong execution, he added.
Opinions expressed by US Insider contributors are their own.