American electric car manufacturer Tesla has published a report for the second quarter of 2022. It reports a slowdown in overall revenue and earnings. Elon Musk’s company has suffered from the Chinese lockdowns, during which its large factory in Shanghai was closed, as well as from rising inflation. In addition, the collapse of the cryptocurrency market forced Tesla to sell about 75% of the bitcoins it held in which it had previously invested.
According to Tesla’s Q2 report (.pdf), the company’s total revenue increased to $16.9 billion, up 42% from the previous year. However, compared to the first quarter, the dynamics of Tesla’s performance decreased markedly – profit was $ 2.3 billion, compared with a record $ 3.3 billion in the first quarter. Revenue compared to the first quarter also decreased – from $18.8 billion to $16.9 billion.
The increase in revenue compared to the previous year was the result of an increase in car deliveries this year and an increase in selling prices for them. But the shutdown of Tesla’s Shanghai plant during this year’s lockdowns and continued problems with the supply of components led to a slowdown in operations in the second quarter. The company tried to make up for the shutdown in Shanghai by expanding production at other plants, but plans to increase production in Germany and Texas fell through. In addition, the situation was complicated by an increase in costs due to rising inflation in the world – as a result, the total income of the corporation was lower than at the beginning of the year.
Tesla continues to dominate the global electric vehicle market, while traditional automakers such as Toyota and General Motors are seeing sharp declines in sales.
However, deliveries of Tesla vehicles from April to June fell 18% compared to the first three months of the year. This came as an unpleasant surprise for investors accustomed to seeing stable growth from quarter to quarter. Another negative point for Tesla is that the market for electric vehicles is becoming increasingly competitive. Hyundai, Kia and Ford are starting to catch up with Tesla in the US EV market. According to researchers Kelley Blue BookTesla held 66% of the U.S. electric vehicle market at the end of the second quarter, up from 78% in the fourth quarter of 2021.
In the past quarter, Tesla also suffered from problems in the global cryptocurrency market. At the beginning of 2021, the brainchild of Elon Musk invested $ 1.5 billion in cryptocurrency, but against the backdrop of the fall in the bitcoin rate this year, it began to get rid of crypto assets. On Wednesday, the company said it had sold about 75% of its bitcoins by the end of June. Elon Musk emphasizes that Tesla sold its bitcoin assets to increase the financial cushion due to problems with the operation of the Shanghai plant. “This should not be taken as a verdict on bitcoin,” he said in a phone call to analysts. Tesla reportedly did not sell its holdings of another cryptocurrency, Dogecoin.
The stock market reacted quite calmly to Tesla’s quarterly report, which, given all the problems that have fallen on it, could be much worse. After the publication of the report, the company’s quotes rose by 0.8%. Morgan Stanley analysts declared CNBC that they see only “short-term obstacles to the profitability of operations due to problems with the increase in new production, especially in Berlin.” Same opinion adheres to and Laura Hoy, an analyst at investment firm Hargreaves Lansdown, who believes the company’s earnings should pick up in the coming months. However, Ms. Hoy is concerned about Tesla selling a large share of its cryptocurrency holdings. According to her, “the loss of bitcoin points to an important component of Tesla’s investment attractiveness.”