Tesla Posts Record US$3.3 Billion Quarterly Profit

Tesla Inc. posted a greater than sevenfold increase in first-quarter profit to reach a record as Chief Executive Elon Musk said the company could boost vehicle production more than expected this year despite supply-chain bottlenecks and disruptions in China.

Mr. Musk on Wednesday said Tesla likely would produce more than 1.5 million vehicles in 2022, up some 60% over last year. The company’s long-term goal is to increase vehicle deliveries by an average of 50% annually. Production in China would recover strongly, he said.

The world’s largest car company by value is recovering from a shutdown at its Shanghai factory, where work was suspended March 28 because of strict government measures meant to slow the spread of Covid-19. Tesla said it lost about a month of production from the shutdown.

“Shanghai is coming back with a vengeance,” Mr. Musk said as the company reported that sales in the first three months of the year had jumped roughly 80% from a year earlier to $18.76 billion, generating a record profit of US$3.32 billion. That topped the previous high of $2.3 billion set in the preceding quarter. Results beat Wall Street’s expectations for both sales and profit.

However, factories are likely to continue operating below capacity through 2022, due largely to supply chain bottlenecks, Tesla said.

Tesla delivered around 310,000 vehicles globally in the first quarter, up from 184,877 a year earlier and 308,650 in the fourth quarter.

Tesla shares closed down nearly 5% Wednesday, before advancing more than 4% in late trading after the company posted its quarterly results, which were buoyed by an uptick in revenue from regulatory credits.

The company sells the credits to rival auto makers that need them to comply with emissions-related rules. Such sales brought in $679 million in the most recent quarter aided by a one-time benefit, up from $518 million a year earlier. Credit sales have long been critical to Tesla’s bottom line, though they have dwindled in recent quarters. The company has said it would become less reliant on them.

Mr. Musk joined the Tesla earnings call almost a week after making a $43 billion nonbinding bid to take over Twitter Inc. The social-media company adopted a so-called poison pill a day after Mr. Musk made his offer. The move makes it harder for any investor to purchase 15% or more of the company’s stock. Mr. Musk, on the Tesla call, didn’t address the Twitter situation.

In Shanghai, Tesla had about a week’s worth of vehicle-parts inventory at its factory and was working with local authorities and suppliers to address logistics problems, local government-run Shanghai Television reported.

Shanghai-area manufacturers have had trouble getting parts delivered, because China’s travel restrictions have made it difficult for trucks to enter the region, analysts have said.

Customers, meanwhile, are having to wait longer to get behind the wheel of a new Tesla. As of March, U.S. buyers could expect to wait roughly eight months for a new long-range Model Y compact sport-utility vehicle, one of Tesla’s most popular models, according to Bernstein Research. Delivery lead times historically have been around two to eight weeks domestically, the firm said.

Tesla in recent weeks delivered its first Model Ys made at its new plants in Germany and Texas. Mr. Musk has said localizing production would improve Tesla’s economics in the long run.

The auto maker has been charging more for its cars amid inflation and persistent supply-chain bottlenecks. The cost of one configuration of the Model Y jumped 30% in the year ended in March, according to Bernstein. Price increases in China haven’t been as extreme, ranging between 5% and 11% in the same period, depending on the model, Bernstein data show.

In some cases, Mr. Musk said, suppliers are requesting 20% to 30% more for parts than they did last year. “I think the official numbers actually understate the true magnitude of inflation,” Mr. Musk said.

Tesla signaled software sales would become an increasingly important profit driver. By the end of the year, it said it expects an advanced driver-assistance feature designed to help vehicles navigate cities to be available to everyone in the U.S. who has purchased Tesla’s “Full Self-Driving” package. Tesla has been gradually releasing trial versions of the technology, which more than 100,000 people are testing, Mr. Musk said in a recent TED interview. The system, which costs $12,000 upfront, doesn’t make vehicles autonomous.

Mr. Musk on Wednesday provided additional details about the dedicated robotaxi he teased earlier this month, saying he hopes the vehicle, which won’t have a steering wheel or pedals, will enter volume production in 2024. He said a trip in such a vehicle would cost less than a bus ticket.

Tesla is working to open the company’s fast-charging network in the U.S. to electric vehicles made by other manufacturers, Senior Vice President Andrew Baglino said. The company launched a pilot program last year that allows non-Tesla drivers in parts of Europe to use its charging network.

The company also is taking steps to enable more of its customers to insure their vehicles through Tesla. It’s aiming for 80% of U.S. customers to have access to a Tesla insurance product by the end of the year, Chief Financial Officer Zachary Kirkhorn said.

The auto maker, like many in the industry, is also contending with soaring costs for the materials used in the rechargeable batteries that power electric vehicles. Raw materials account for 80% of the cost of a lithium-ion battery, up from 40% in 2015, according to Benchmark Mineral Intelligence, which tracks the battery supply chain.

Mr. Musk, who tweeted earlier this month that lithium prices had “gone to insane levels,” revisited the idea that Tesla might get into the business of mining and refining the metal and urged others to do so as well.

Tesla has flirted with that prospect for years and even neared deals in the middle of last decade to buy lithium mines in the U.S. and Argentina, according to a person familiar with the matter. But the company didn’t follow through with those acquisitions as it gave priority to production of its Model 3 sedan, the person said. In the years since, the balance of power has shifted toward suppliers as car companies from Ford Motor Co. and Volkswagen AG to newcomer Rivian Automotive Inc. scramble to secure the materials they need to meet ambitious electric-vehicle production targets. Ford and General Motors Co. are scheduled to report earnings next week. Rivian’s quarterly results are due in May.

Lithium carbonate prices averaged around $60,800 per metric ton in March, up roughly $50,000 from a year earlier, Benchmark data show.

—Raffaele Huang contributed to this article.

The marketplace has spoken and, at least for now, it’s showing preference for hybrids and plug-in hybrids (PHEVs) over battery electrics. That makes Toyota’s foot dragging on EVs (and full speed ahead on hybrids) look fairly wise, though the timeline along a bumpy road still gets us to full electrification by 2035.

Italian supercar producer Lamborghini, in business since 1963, is also proceeding, incrementally, toward battery power. In an interview, Federico Foschini , Lamborghini’s chief global marketing and sales officer, talked about the new Urus SE plug-in hybrid the company showed at its lounge in New York on Monday.

The Urus SE interior gets a larger centre screen and other updates.
Lamborghini

The Urus SE SUV will sell for US$258,000 in the U.S. (the company’s biggest market) when it goes on sale internationally in the first quarter of 2025, Foschini says.

“We’re using the contribution from the electric motor and battery to not only lower emissions but also to boost performance,” he says. “Next year, all three of our models [the others are the Revuelto, a PHEV from launch, and the continuation of the Huracán] will be available as PHEVs.”

The Euro-spec Urus SE will have a stated 37 miles of electric-only range, thanks to a 192-horsepower electric motor and a 25.9-kilowatt-hour battery, but that distance will probably be less in stricter U.S. federal testing. In electric mode, the SE can reach 81 miles per hour. With the 4-litre 620-horsepower twin-turbo V8 engine engaged, the picture is quite different. With 789 horsepower and 701 pound-feet of torque on tap, the SE—as big as it is—can reach 62 mph in 3.4 seconds and attain 193 mph. It’s marginally faster than the Urus S, but also slightly under the cutting-edge Urus Performante model. Lamborghini says the SE reduces emissions by 80% compared to a standard Urus.

Lamborghini’s Urus plans are a little complicated. The company’s order books are full through 2025, but after that it plans to ditch the S and Performante models and produce only the SE. That’s only for a year, however, because the all-electric Urus should arrive by 2029.

Lamborghini’s Federico Foschini with the Urus SE in New York.
Lamborghini

Thanks to the electric motor, the Urus SE offers all-wheel drive. The motor is situated inside the eight-speed automatic transmission, and it acts as a booster for the V8 but it can also drive the wheels on its own. The electric torque-vectoring system distributes power to the wheels that need it for improved cornering. The Urus SE has six driving modes, with variations that give a total of 11 performance options. There are carbon ceramic brakes front and rear.

To distinguish it, the Urus SE gets a new “floating” hood design and a new grille, headlights with matrix LED technology and a new lighting signature, and a redesigned bumper. There are more than 100 bodywork styling options, and 47 interior color combinations, with four embroidery types. The rear liftgate has also been restyled, with lights that connect the tail light clusters. The rear diffuser was redesigned to give 35% more downforce (compared to the Urus S) and keep the car on the road.

The Urus represents about 60% of U.S. Lamborghini sales, Foschini says, and in the early years 80% of buyers were new to the brand. Now it’s down to 70%because, as Foschini says, some happy Urus owners have upgraded to the Performante model. Lamborghini sold 3,000 cars last year in the U.S., where it has 44 dealers. Global sales were 10,112, the first time the marque went into five figures.

The average Urus buyer is 45 years old, though it’s 10 years younger in China and 10 years older in Japan. Only 10% are women, though that percentage is increasing.

“The customer base is widening, thanks to the broad appeal of the Urus—it’s a very usable car,” Foschini says. “The new buyers are successful in business, appreciate the technology, the performance, the unconventional design, and the fun-to-drive nature of the Urus.”

Maserati has two SUVs in its lineup, the Levante and the smaller Grecale. But Foschini says Lamborghini has no such plans. “A smaller SUV is not consistent with the positioning of our brand,” he says. “It’s not what we need in our portfolio now.”

It’s unclear exactly when Lamborghini will become an all-battery-electric brand. Foschini says that the Italian automaker is working with Volkswagen Group partner Porsche on e-fuel, synthetic and renewably made gasoline that could presumably extend the brand’s internal-combustion identity. But now, e-fuel is very expensive to make as it relies on wind power and captured carbon dioxide.

During Monterey Car Week in 2023, Lamborghini showed the Lanzador , a 2+2 electric concept car with high ground clearance that is headed for production. “This is the right electric vehicle for us,” Foschini says. “And the production version will look better than the concept.” The Lanzador, Lamborghini’s fourth model, should arrive in 2028.

Tesla Posts Record US$3.3 Billion Quarterly Profit

Elon Musk predicts rapid recovery in vehicle production in China to drive strong growth in total output.