“Recent Covid-19 outbreaks have been weighing on our supply chain and factory operations,” Tesla said. “Furthermore, prices of some raw materials have increased multiple-fold in recent months. The inflationary impact on our cost structure has contributed to adjustments in our product pricing.”
Revenue of $18.8 billion also easily topped forecasts, rising 6% from the fourth quarter sales and 81% from the year ago total. Demand for its cars was so strong that the days supply of vehicles it had available for customers fell to only three days.
CEO Elon Musk said that despite the company’s Shanghai plant being shut down for a couple of weeks in April due to Covid lockdowns there, and several suppliers also having to shut down, he thinks the factory should be able come close to its first quarter production level, if not exceed it.
“Tesla Shanghai … is coming back with a vengeance,” Musk told investors on the investor conference call. “So I think notwithstanding new issues that arise, I think we will see record output per week from [Tesla’s factory in] Shanghai this quarter, albeit we are missing a couple of weeks.”
Musk took time to thank suppliers who he said “have really worked day and night to ensure that Tesla is able to keep the factories running.” And he said the company should be able to produce 1.5 million vehicles this year, a bit better than a 50% increase from its 2021 output.
He said he believes the company should be able to continue its 50% annual growth rate “for the foreseeable future, for basically several of the next years.”
“Basically, the future is very exciting. I’ve never been more optimistic or excited about Tesla’s future than I am right now,” he said.
“It may seem like maybe we’re being unreasonable about increasing the prices of our vehicles given that we had record profitability this quarter, but the wait list for our vehicles is quite long,” he said. “And some of the vehicles that people will order, the wait list extends into next year. So our prices of vehicles ordered now are really anticipating supplier and logistics cost growth that that we’re aware of and believe will happen over the next 6 to 12 months.
“We absolutely want to make EVs as affordable as possible,” he added. “It’s been very difficult with … inflation is at like a 40- or 50-year high. Suppliers are under severe cost pressure. In some cases we’re seeing suppliers request 20% to 30% increase in costs from the end of last year.”
Tesla’s results are particularly impressive given the current supply chain problems, said Dan Ives, tech analyst for Wedbush Securities.
“We believe these ‘Cinderella-like’ delivery numbers in a brutal supply chain backdrop speaks to an EV demand trajectory that looks quite robust for Tesla heading into the rest of 2022,” he wrote in a note.
But Tesla sells its cars only in company-owned stores, putting it in a better to profit from the higher prices it gets for its cars.
Shares of Tesla jumped 4% in after-hours trading following the company’s earnings report.