Tesla profits wiped out by factory closures in China as it sells Bitcoin

Tesla profits wiped out by factory closures in China as it sells Bitcoin

Tesla fell victim to supply chain chaos in China and a damaging bitcoin bet, suddenly ending a record streak of profits for Elon Musk’s automaker.

The electric vehicle maker also sold some of its Bitcoin holdings, the company said on Wednesday, as its cryptocurrency bet soured.

Tesla’s revenue fell 9% between the second and first quarters to $16.9bn (£14.1bn), although it was still 42% higher than a year earlier earlier.

Its revenue was down from the record $18.8 billion three-month revenue it posted earlier this year amid supply chain issues and a shuttered factory in China due to Covid restrictions.

Telsa said it “faced some challenges including limited production and shutdowns in Shanghai for most of the quarter” but said it “continued to make significant progress across the business during the second quarter of 2022”.

Earlier this month, Tesla said it delivered more than 254,000 electric vehicles, up from about 300,000 in the previous quarter.

Tesla’s factory in Shanghai has been closed for nearly two months due to ongoing coronavirus shutdowns in China as the company grapples with a host of supply chain issues. However, the electric carmaker added that it had a record month at its Fremont factory and produced 1,000 vehicles in a single week from its Gigafactory in Berlin.

The company said it posted operating profit of $2.5 billion in the three months to June. Shares jumped 4% after hours trading in New York after promising a “record for the second half of 2022”.

Shares of Tesla have fallen about 40% so far this year, with the sale of technology wiping hundreds of millions of dollars from the value of the electric car maker despite its record results in April. He is currently worth around $770 billion.

Still, the electric-car maker remained dominant in the United States and bucked the downward trend in car sales among rival automakers. Incumbents such as Volkswagen saw their sales fall to their lowest level in 10 years due to a tightening supply chain for semiconductors. Ford sales fell 17% earlier this year. BMW sales fall 20% in its latest round of results.

Emerging Chinese players such as BYD proved more difficult. BYD overtook Tesla’s electric car sales earlier in July.

His latest results also appeared to mark the end of Mr. Musk’s love affair with Bitcoin. Tesla said it took a writedown of its Bitcoin holdings and sold 75% of its cryptocurrency for $936 million in cash.

In early 2021, Tesla bought bitcoins worth $1.5 billion, buying the coins at the time for a value of around $36,000. The price of Bitcoin has fallen this year and was worth around $19,000 at the end of June, the end of Tesla’s financial period.

Mr Musk has been candid about his fears for the wider economy, warning in June that he had a “super bad feeling about the economy”. He also called the company’s factories in Texas and Berlin “gigantic money furnaces” that burn billions of dollars.

Tesla’s chief executive outlined plans to cut Tesla’s staff by 10%, calling a recession “inevitable”. Other electric vehicle rivals have been forced to cut jobs. Arrival, a British electric van company, said it was cutting 800 people, while US electric vehicle maker Rivian plans to cut hundreds of jobs after its share price crashed 70% this year.

Despite falling electric vehicle stocks, Tesla has remained a favor with retail investors who have locked themselves into Mr. Musk’s company. Its valuation has also been driven in part by its efforts in automated driving. These were hit hard this month by the departure of its Autopilot manager, Andrej Karpathy.

The electric car maker behind the Model 3 and Model Y has already raised the price of its electric vehicles due to spikes in inflation.

Tesla’s share price was also weighed down by Mr. Musk’s audacious $44 billion takeover attempt on Twitter, which turned into litigation after the Tesla boss tried to pull out of the deal. the agreement.

The takeover drew comparisons to Mr. Musk’s last bold M&A attempt, which saw him try to take Tesla private at $420 a share in 2018.

Twitter is now trying to force Mr. Musk to go through with the takeover, which was largely to be funded by selling Tesla stock.

On Tuesday, Twitter won the first phase of its legal fight against Mr. Musk, forcing an expedited trial by October. Mr Musk’s legal team had tried to push back any trial until 2023.

The billionaire claims that Twitter has not been open about the number of “bots”, or spam accounts, on the social network. He uses this as an excuse to break the merger agreement. Twitter, however, argues that Mr. Musk should be forced to buy Twitter and cannot back down.

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