Elon Musk adds $25b to his fortune in one day as Tesla surges

DETROIT: Tesla chief Elon Musk said the electric-vehicle maker had been through “supply chain hell” as the company’s second-quarter profit fell 32 per cent from record levels in the first quarter as supply chain issues and pandemic lockdowns in China slowed production of its electric vehicles.

But the company still surprised analysts with a better-than-expected net profit for the quarter. Shares closed 10 per cent higher on Wall Street, helping to add $US17 billion ($24.5 billion) to Musk’s fortune. The richest person in the world now has a net worth of $US242 billion, according to Bloomberg. Amazon’s Jeff Bezos is second on the list with a net worth of $US148 billion.

Wall Street has cheered Tesla’s latest results.Credit: AP

Tesla stuck with a prediction of 50 per cent annual vehicle sales growth over the next few years, but said that depended on the supply chain, equipment capacity and other issues.

The company made a record $US3.32 billion in this year’s first quarter.

Tesla’s sales from April to June fell to 254,000 vehicles. But the company predicted record-breaking production in the second half and said that in June it had the highest production month in its history.

“We have potential for a record-breaking second half of the year,” Musk told analysts, noting the strong June production at the company’s factories in California and Shanghai. But he cautioned that the industry has faced severe challenges securing adequate supplies of parts and materials.

“It’s kind of been supply chain hell for several years,” Musk said.

Industry analysts had been expecting lower earnings after the lower sales figures and tweets by Musk about laying off 10 per cent of the company’s workforce due to recession fears.

Musk described new factories in Austin and Berlin as “money furnaces” that were losing billions of dollars because supply chain breakdowns were limiting the number of cars they can produce.

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.

Tesla vehicles wait for shipping in Shanghai. Tesla predicts record-breaking production despite pandemic disruptions.Credit: Bloomberg

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”.

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

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