World

Tesla’s profits jumped in the first quarter but challenges loom.

Tesla said on Wednesday that it made a $3.3 billion profit in the first three months of the year, up from $438 million a year earlier, but the company also said that it expected its factories to run below capacity for the rest of 2022.

The electric carmaker said its revenue in the first quarter totaled $18.8 billion, up from $10.4 billion a year earlier. The profit significantly exceeded investor expectations.

Tesla was the fastest-growing major carmaker last year, nearly doubling sales to almost one million vehicles while the industry as a whole slumped. New factories near Austin, Texas, and Berlin position the company to repeat that growth this year — if it can overcome some serious challenges.

These include a semiconductor shortage that has plagued automakers for more than a year. Tesla has also had to shut down its factory in Shanghai because of China’s draconian attempts to contain the coronavirus. China accounted for one quarter of Tesla sales last year, and the plant in Shanghai also exports cars to other countries in Asia and Europe.

Tesla said on Wednesday that it had resumed “limited production” in Shanghai after a three-week shutdown. But it warned that it continued to face “persistent” supply chain problems as well as rising costs for raw materials.

“Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through the rest of 2022,” Tesla said in a statement.

Analysts said supply-chain and production problems could hamper the company’s growth this year. Tesla has said that it is aiming to increase vehicle sales by around 50 percent annually for years to come.

“A robust demand story for Tesla is being overshadowed by brutal production issues in China as well as a Rubik’s cube supply chain, which continues to haunt Tesla as well as the rest of the auto/tech industry,” analysts at Wedbush Securities said in a note to clients ahead of Tesla’s first-quarter earnings announcement.

Tesla remains the largest manufacturer of battery-powered cars by far. During the first three months of 2022, it sold 310,000 vehicles, an increase of almost 70 percent from a year earlier. But traditional automakers like Volkswagen, Ford Motor and Hyundai Motor have woken up to the threat and begun selling models that challenge Tesla’s dominance.

There is also a risk that Elon Musk, the Tesla chief executive, could alienate some car buyers with his high-profile offer to buy Twitter. Some potential customers may applaud Mr. Musk as a champion of free speech, but others may fear he will open up Twitter to hate speech and misinformation.

Leave a Reply

Your email address will not be published.

Back to top button