Tesla Posts Record US$3.3 Billion Quarterly Profit
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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.

By REBECCA ELLIOTT
Thu, Apr 21, 2022 1:45pmGrey Clock 4 min

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.

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Australia’s best builders take out top awards

The country’s best builders downed tools for the national awards for the Master Builders Association, their first live awards night since COVID

By Robyn Willis
Tue, Nov 29, 2022 2 min

Sydney’s newest skyscraper has collected yet another award, this time for the builder.

Hot on the heels of being named International High Rise of the Year in Frankfurt, Sydney’s Quay Quarter Tower is once again on the winner’s podium at the weekend’s Master Builders Assocation’s  National Excellence in Building and Construction Awards.

Multiplex Constructions won the top award, the National Construction Master Builder of the Year for the 50-storey Quay Quarter Tower at the awards hosted by Sylvia Jeffreys and Peter Stefanvoic. 

MBA CEO Denita Wawn singled out the exceptional work on the landmark building, which was a joint project between Danish architectural firm 3XN and Australian architectural firm, BVN.

“The 50-storey Quay Quarter Tower is the catalyst for the transformation of Sydney’s iconic Circular Quay, supporting Sydney’s future as a green, global and connected city,” she said. “Multiplex was required to overcome key construction challenges of building movement, complex demolition and strengthening works, large cantilevered elements, and concurrent construction across multiple fronts.”

In other top categories, the Toyota National Young Builder of the Year went to Andrew Kerr, founder of AusCon NT, from the Northern Territory.

“Born and raised in Alice Springs, Andrew is passionate about the local community of Alice Springs and aims to build a lasting reputation through supporting local businesses and working on construction projects for the betterment of the local community and its people,” Ms Wawn said.

Perth builder Spadaccini Homes took out the award for National Residential Master Builder of the Year for the Hirniak residence, while Vos Construction & Joinery was awarded the 2022 National President’s Award for their work on the My State Bank Arena in Hobart.

Tasmania was also home to the National Apprentice of the Year, Zac Smith.

“Zac’s outstanding efforts on site were also reflected by his TAFE results,” Ms Wawn said. “His understanding of the importance of WHS and respecting others on a work site saw him become a sought-after team member and offered additional project responsibilities.”

He was not at the award ceremony on the weekend because his wife was giving birth.

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