Tesla makes record quarterly profits, says supply-chain snags prevent its factories from running ‘at full speed’

Tesla Inc. reported record quarterly profits and sales late Wednesday, but changed its outlook, saying chip shortages, port congestion and other supply-chain and infrastructural challenges are hindering investors from moving its factories to full speed.

Tesla TSLA,
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It earned তৃতীয় 1.6 billion, or 44 1.44 per share, in the third quarter, up from $ 331 million or 27 cents per share a year earlier. Adjusting for one-time items, the EV maker earned 1.86 per share.

Revenue rose 57% to $ 13.8 billion from $ 8.8 billion a year earlier.

Analysts surveyed by Factset expected Tesla to report consistent earnings of 1. 1.62 per share on sales of 14 billion.

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Shortages of running chips and auto parts and logistical problems mean Tesla has not run its factories “at full capacity,” Tesla Chief Financial Officer Zach Kirkhorn said in a call with investors and analysts after the results.

People want to buy a Tesla, but “we can’t increase production capacity fast,” he said.

“We’re trying our best to maximize that capacity and to be able to meet the demand we’re getting,” but depending on the type of car preferred, someone buying a Tesla today may have to wait a few months, or a few quarters, he said.

Tesla has nearly doubled its deliveries this year, but it’s “extraordinarily difficult to achieve,” he said.

CEO Elon Musk was not on the phone. After Tesla’s second-quarter results in late July, Musk told Wall Street that he would not be able to stay in the Tesla earnings call in the future “unless I have something to say.”

Tesla shares fell more than 1% in the extended session on Wednesday, after the regular trading day ended above 0.2%. The stocks made some losses towards the end of after-hours trading.

The “mute” response was worth expecting for a beat, said CFRA analyst Garrett Nelson. The company says its growth momentum will largely be determined by external factors “giving investors a break,” he said.

See also: ‘There are limitations to how big you can take in the Gulf region;’ Musk is moving from California to Tesla headquarters in Texas

Tesla has removed language from its perspective which kept it optimistic about 2021 growth.

EV makers have moved away from specific sales guidelines this year and reiterated their broad target of achieving an average annual growth of 50% on sales “on the horizon for many years” on Wednesday.

But it has removed a sentence that has led Tesla investors to believe that this year could be even better: “In some years it could grow faster, which we expect in 2021.”

That rosary hope for this year was written to shareholders as a second-quarter letter in a previous Tesla letter, but was absent in Wednesday’s letter.

In the call, Kirkhorn tried to reassure investors and he reiterated at least 50% growth as the year’s goal despite supply-chain disruptions.

“I think it’s going to be a tough goal but that’s the goal of the internal team,” he said. Tesla wants to get “millions of cars per year” in the next few years and will eventually be able to achieve a rate of 20 million cars per year.

“We’re going to grow as fast as possible, keeping an eye on the 50% annual growth rate,” Kirkhorn said.

The company said its operating cash flow, minus capital expenditures, was $ 1.3 billion in the third quarter. In total, its cash and equivalent fell $ 164 million to $ 16.1 billion in the third quarter.

Read: More electric pickup trucks are coming to market. But who will buy these?

Operating profits rose mostly due to increased sales volume and cost reductions, but it was offset by rising costs, lower revenues from regulatory credits, additional costs related to supply-chain snags and $ 51 million bitcoin-related constraints, the company said.

Technically, the big news is that Tesla says it’s shifting to a cobalt-free battery chemistry for all its standard-range vehicles. Lithium iron phosphate batteries were an option for certain Model 3 trims.

Cobalt is seen as the highest supply-chain risk for electric vehicles in the short and medium term, the Department of Energy said earlier this year. “There are economic, security and social drivers to reduce (cobalt) content here,” and moreover, there are no large reserves of metal in the United States, it says.

Tesla stock has risen 23% so far this year, compared to the S&P 500 index SPX’s gain of about 21%.
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