Tesla profits soar on higher sales of cheap models

Photo: AP Elon Musk

US maker of electric cars Tesla announced record profits for the second quarter of this year, exceeding analysts' estimates. The surge in profits is attributed to accelerating sales of cheaper models and cost cutting, Reuters elaborated. Tesla CEO Elon Musk noted that the global semiconductor chip shortage that led to temporary factory shutdowns for the automaker, still is a serious challenge but offered no details on the timing of its Cybertruck and next-generation batteries.

For the first time since 2019, Tesla profits did not only rely on sales of environmental credits to other automakers, a sign of increasing financial health for the manufacturing operation. In a call with investors and analysts, Tesla executives announced that volume production growth for this year will depend on parts availability, as it aims to speed deliveries by more than 50%.

Musk confirmed that Tesla has "many calls at midnight, 1 a.m., just with suppliers about resolving a lot of the shortages." While some people had suggested Tesla build its own chip fab, he pointed to the long lead time. "That would take us, even moving like lightning, 12 to 18 months," he said. Still, Musk said Tesla expects to start limited production this year of the Model Y SUV at factories under construction in Texas and Germany. Tesla said it has delayed the launch of its Semi truck program to 2022 to focus on starting factories and due to limited availability of battery cells and other parts this year. Musk did not give a time frame for when Tesla will start mass production of its new-generation batteries and its much-anticipated Cybertruck.

"It is difficult to say when the last of the technical challenges will be solved," he said, referring to its 4680 battery cells. He said Tesla has a backup plan of using its existing 2170 batteries, adding that its battery cell suppliers would double production next year. The carmaker said revenue jumped to $11.96 billion from $6.04 billion a year earlier, when its California factory was shut down for more than six weeks due to local lockdown orders to fight the pandemic. Analysts had expected revenue of about $11.3 billion.

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