Tesla numbers beat expectations but supply chain struggles lead to Semi delay

Tesla Inc beat Wall Street expectations with its second-quarter results and said the first cars will roll off production lines in the new Berlin and Texas gigafactories later this year, although the launch of the Semi truck programme has been pushed to 2022 as the group struggles with supply chain challenges. Boss Elon Musk, who received US$176mln of share-based payments during the period, said the “big struggle this quarter” was to get enough supplies for airbags and seatbelts in the company's electric vehicles. Nevertheless, total revenues came in at US$11.96bn, up 98% on this time last year thanks to a 148% increase in Model 3/Y deliveries offsetting a decline in Model S/X deliveries, and ahead of the US$11.51bn consensus forecast. Average sales prices fell 2% year-on-year, which reflected increased sales of lower-priced cars in China. Automotive revenues were US$10.2bn, up 97% year-on-year, while Energy Storage sales more than doubled to US$801mln, while Services & Other revenue jumped 95.3% to $951mln.  Capital expenditure was up 176% to US$1.5bn, while free cash flow swelled 48% to US$619mln. Automotive gross margin in the quarter reached 28.4%, or 25.8% once regulatory credits are eliminated, while the Street's estimate was for 25.3%. Despite the share-based payments to Musk, as well as lower regulatory credit revenues and a Bitcoin-related impairment of $23mln, operating margins soared to 11.0%, up from 5.7% last quarter and 5.4% a year ago. Earnings per share landed at US$1.02, ahead of analyst expectations of US$0.98. "The margin performance was impressive and will be a focus of the bulls with more Street questions around when profitability can be hit ex EV tax credits heading into 2022," said analysts at broker Wedbush. "From a capacity perspective, Tesla plans to build its first Model Y vehicles in Berlin and Austin during 2021, a positive sign for those worried about the timeline of these buildouts. While supply chain issues remain, it appears to be moderating heading into the next 6 to 9 months with our view that 900k deliveries is still the bogey for annual 2021 numbers." Analyst Nick Hyett at Hargreaves Lansdown noted that Tesla didn’t update longer term production or profit guidance, although reiterated that it has sufficient liquidity to fund its product roadmap and long-term expansion plans. “The main impression of Tesla from these numbers is one of resilience. Despite the decline in higher margin Model X/S deliveries, an increase in lower value Chinese vehicles and potential headwinds from global computer chip shortages, Tesla has managed to grow production substantially and crucially margins have improved dramatically too," he said.