Elon Musk’s Tesla races ahead of rising costs with price hikes

FILE PHOTO: Tesla hands over first cars produced at new
FILE PHOTO: Tesla hands over first cars produced at new plant in Gruenheide

By Hyunjoo Jin and Akash Sriram

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SAN FRANCISCO (Reuters) -Tesla Inc results surged past Wall Street expectations on Wednesday, as higher prices helped insulate the electric vehicle maker from supply chain chaos and rising costs.

Tesla has been an outlier since the pandemic outbreak, posting record deliveries and earnings for several quarters when rivals wrestling with global supply chain snarls rolled out production halts.

Shares of Tesla rose 6% after the close of regular trading.

On an investor conference call, CEO Elon Musk said Tesla has a reasonable shot at achieving 60% vehicle delivery growth this year and remains confident of seeing 50% annual delivery growth for several years.

“Price increases are nicely exceeding cost inflation,” said Craig Irwin at Roth Capital.

“Chinese production issues seem well managed, and we expect Austin and Berlin to make up the slack from Shanghai’s 19-day outage.”

Tesla raised its prices in China, the United States and other countries, after Musk said in March the U.S. electric carmaker was facing significant inflationary pressure in raw materials and logistics amid the crisis in Ukraine.

“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.

Tesla said chip shortages and recent COVID-19 outbreaks have been weighing on its supply chain and factory operations, while prices of some raw materials have increased multiple-fold in recent months.

The world’s most valuable automaker said revenue was $18.8 billion in the first quarter ended March 31, versus estimates of $17.8 billion, according to IBES data from Refinitiv. This is up 81% from a year earlier.

Revenue from sales of its regulatory credits to other automakers jumped 31% to $679 million in the first quarter from a year earlier, helping boost revenue and profits.

Its earnings per share was $3.22, beatings analysts’ estimates of $2.26.

Tesla’s pre-tax profit (EBITDA) per vehicle delivered rose by more than 60% to $16,203 in the latest quarter compared with a year earlier.

Tesla shut down its Chinese factory for about three weeks before resuming production gradually this week. “Although limited production has recently restarted, we continue to monitor the situation closely,” Tesla said on Wednesday.

Tesla, which does not advertise its products, said its vehicle orders spiked on the day after Super Bowl games during which other automakers aired a number of commercials about their electric vehicles. For example, Leonardo DiCaprio-backed Polestar’s ad took a potshot at Tesla and Volkswagen.

On an investor conference call, Musk said Tesla expects to mass produce a robotaxi with no steering wheel or pedals by 2024.

Musk offered to buy Twitter last week, sparking concerns that he may sell some Tesla stocks or borrow against additional Tesla shares to finance his $43 billion bid.

Investors also worry about Musk being distracted from the electric carmaker at a time when it is ramping up production at new factories in Berlin and Texas.

“Factory ramps take time, and Gigafactory Austin and Gigafactory Berlin-Brandenburg will be no different,” Tesla said in a statement.

The new factories will be key to meeting demand and reducing reliance on its China factory, its biggest one, which is slowly recovering from a plant shutdown.

(Reporting by Hyunjoo Jin in San Francisco and Akash Sriram in Bengaluru and Joe White in Detroit; Editing by Sriraj Kalluvila and Lisa Shumaker)