Tesla profit falls but is stronger than expected

But Tesla exceeded Wall Street expectations from April to June with adjusted earnings of $US2.27 a share. Analysts expected $US1.81. Revenue was $US16.93 billion, beating estimates of $US16.54 billion.

Edward Jones analyst Jeff Windau said the earnings were better than expected. He noted that the decrease in automobile revenue from the first quarter was offset by stronger energy storage, solar and services performance.

Musk reiterated the 50 per cent annual vehicle sales growth forecast but said it depended a lot on circumstances that the company might not be able to control.

Windau said the forecast “shows the confidence they have in their ability to grow the electric vehicle market”.

Tesla shares rose 1.5 per cent to $US753.40 in extended trading on Wednesday.

The company said it converted 75 per cent of its bitcoin investment to government currency during the quarter, adding $US936 million in cash to its balance sheet. It spent $US1.5 billion on the investment last year. Overall, it booked a $US106 million cost for bitcoin, plus added costs for employee reductions.

Musk said the bitcoin holdings were sold to raise cash because of uncertainty over how long pandemic lockdowns would last in China. He said Tesla is open to increasing bitcoin holdings in the future.

The price of bitcoin has fallen about 50 per cent so far this year.

Musk also said Tesla is seeing indications that inflation may be declining as prices for most commodities drop. He cautioned against making economic predictions but said commodity prices, such as steel and aluminum, are trending down.

Musk said Tesla’s “Full Self-Driving” beta test software is on track to be released before the end of this year to all North American customers who want to buy it. And with regulatory approval, it will be released in Europe and other parts of the world, he said. Despite its name, “Full Self-Driving” cannot drive itself, and Tesla warns that drivers have to pay attention all the time.

Chief financial officer Zachary Kirkhorn said the company was seeing “maybe a little” impact on demand due to macroeconomic issues. Musk reiterated that Tesla has a vehicle supply problem, not a demand problem, and said it now takes six months to a year to get a new vehicle. He said the company has increased prices to “embarrassing levels” due to inflation, but he hopes to reduce prices a bit.

AP, Bloomberg