Bitcoin sales and environmental credits boost profits in Tesla. Tesla, led by Elon Musk, has had a good start to the year, with increased revenues and record sales of electric vehicles.
It happened amid manufacturing setbacks caused by a global shortage of computer chips that have impacted other automakers.
Mr. Musk stated that the chip shortage posed “supply chain problems” but that this “specific crisis” had subsided.
Sales in Bitcoin and renewable credits boosted profits to $438 million (£315 million) in the first three months of the year, up from $16 million last year.
However, a $299 million payout to Mr. Musk as part of a controversial compensation package in 2018 drained the profits.
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Revenue increased to $10.4 billion from $6 billion in the previous year.
Tesla’s Model 3, a midsize sedan, was the “best-selling premium sedan of any kind in the world” for the year, according to Mr. Musk.
He also estimated that the Model Y, the company’s midsize sport utility vehicle, will become the best-selling car or truck in the coming years.
“We’ve seen a real shift in customer perception of electric vehicles, and our demand is the best we’ve ever seen,” Mr. Musk said.
According to the group, consumers in China, where Tesla started manufacturing last year, have reacted positively to the Model Y.
With hundreds of producers competing for a piece of the rising demand, China is probably the most lucrative market for electric cars in the world.
Bitcoin Move
However, sales of automobiles did not account for the entirety of the company’s earnings.
During the first quarter, the corporation purchased $1.5 billion in Bitcoin but then reduced its holdings by 10%, resulting in $101 million in sales.
Tesla recently made it easier for drivers to buy cars in Bitcoin, enabling the company to amass more digital currency.
“It is our intent to hold what we have long term and continue to accumulate Bitcoin from transactions from our customers as they purchase vehicles,” the company’s chief financial officer, Zachary Kirkhorn, told investors.
Tesla also gains points for exceeding carbon and fuel efficiency requirements, which it sells to other carmakers that fall short of those standards to reduce fines.
In the first year, the firm raised $518 million from the selling of those credits, up 46% from the same quarter in 2020.
Tesla said it delivered roughly half a million cars in 2020, with 185,000 in the first three months.
The company anticipates a 50% rise in annual deliveries and is increasing demand at its current facilities in California and Shanghai while constructing new factories in Berlin and Texas.
Tesla is the most profitable automotive maker in the country, with investors betting on solid growth in electric cars in the coming years, driving up its stock price.
However, the company produces far fewer vehicles than Toyota and Volkswagen, all of which sold over nine million vehicles last year.
Despite the relatively optimistic showing, Nicholas Hyett, market analyst at stockbroker Hargreaves Lansdown, believes there could be issues ahead.
“There’s the complete lack of guidance around near-term production headwinds,” he said.
“A global shortage of computer chips is expected to limit production from all manufacturers in the immediate future, and Tesla won’t be exempt. Given the ongoing importance of its production ramp-up, it may even be more heavily impacted.”
And despite Tesla making a profit from sales of Bitcoin, Mr. Hyett said there were many skeptics:
“Tesla has made some $101m on its investment so far, which is all well and good, but huge gains and losses aren’t really what corporate treasuries are all about.
“Investors could well argue that if they wanted to have exposure to Bitcoin, they would have bought some themselves and don’t need Tesla to do it for them.
“Still, Tesla has never played by the rules – so far, that hasn’t stopped it being a winner.”
