September 29, 2021

Tesla, a rain of records and some bad news

Posted on Jul 27, 2021 at 7:50 amUpdated on Jul 27, 2021, 11:44 AM

If he wants to keep Tesla’s market valuation stratospheric (which is still the case despite the decline in recent months), Elon Musk can’t afford to disappoint the markets. The boss of the Californian company once again succeeded in the exercise Monday evening, with results for the second quarter where several spectacular records come to mitigate the scope of more unfortunate news.

For the first time, the three-month turnover of the electric car specialist has passed the $ 10 billion mark to 10.2 billion. This is twice as much as a year ago, when production had to be interrupted at the California plant in Fremont due to the health crisis.

Aggressive pricing policy

This year, Tesla delivered 201,000 vehicles from March to June, another record, despite the shortage of semiconductors, which affected the group like its competitors. A success due both to the enthusiasm of customers for the Y model, the group’s latest addition, but also to an aggressive pricing policy to support sales in Europe and China.

However, this did not affect the operating margin, which reached 11%, a level again unprecedented for the company. Profits were arguably driven by strong demand in the US auto market, which also benefited GM, Ford and Stellantis, all of which are expected to post record margins in the coming days.

Less dependence on the sale of CO2 credits

For Tesla, this translates into net income of 1.14 billion euros for this quarter. Unheard of since the company was founded in 2003, and much better than analysts expected.

This figure is all the more to be welcomed since it was obtained with revenues from the sale of CO2 credits to competitors down, to 354 million over 3 months, against 518 million from January to June 2021 (-17% ). During the last three quarters, this resource, which will eventually disappear, had kept the accounts in the green while the car production activity was in deficit.

This time, the “core-business” ended the quarter in the green, which obviously appears to be much healthier in the long term. With Tesla’s margin growing up and down, it remains to ensure that this development is sustainable.

Monday night’s presentation contained some more annoying information. The delay in building the Berlin plant, which is due to open this month, has been confirmed, with Tesla now saying it is “on track” to get it up and running by the end of the year.

There are also delayed launches, such as the launch of the electric semi-truck shifted in 2022. Elon Musk has also confirmed that the production of Cybertruck, his pick-up with a futuristic look, will also be delayed. This leaves time for Ford, which has entered this niche with a 100% electric version of its best-selling model, the F-150, to take the lead.

Some fears over the next few months

The situation regarding the semiconductor shortage continues to be “pretty serious,” the leader said on a conference call with analysts. “It’s complicated to say how long it will last because we can’t do anything about it ourselves. The group has so far managed to get around part of the problem by using new chip designs and rewriting software accordingly.

But “for the rest of the year, our growth will depend on the smallest element of our supply chain,” warned the boss of Tesla. The automaker, which announced in January that it wanted to increase its deliveries by 50% on average per year for several years, has not officially changed its forecasts, however.

The group has long dominated the electric vehicle market but faces increasing competition. According to the specialist firm Cox Automotive, Tesla accounted for 64% of sales of electric vehicles in the United States in the second quarter, against 71% in the previous quarter and 83% over the same period in 2020. And in Europe, it is the giant Volkswagen and its deep pockets that stands against the Californian manufacturer.

The South African boss has finally confirmed his intention, announced recently on Twitter, to open the network of terminals to other brands of electric vehicles. In the United States, it will be enough, he promises, to download the application and buy an adapter for the socket.

“Our goal is to support the advent of sustainable energy. It’s not about creating an enclosed space and using it to attack our competition, ”he said. Increasing the use of Tesla’s network will also allow the group to achieve economies of scale and be more profitable.

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