Tesla crushed analysts’ expectations for its second quarter earnings. However, soaring input costs attenuated profit margins of the electric vehicle maker.
The company’s adjusted earnings for the three months ending in June rose +56.5% from the year-ago quarter to $2.27 per share, well above the Street expectations of $1.86 per share.
Revenues climbed +41% from the year-ago period to $16.94 billion, but fell short of analysts' forecasts of $17.2 billion.
Tela’s automotive margins came in at 27.9%, decreasing by 500 basis point from last year. Analayst had expected 28.2%. Input cost pressures and expenses linked to the ramp-up of new factories in Austin and Berlin weighed on margins. Excluding the effect of emissions credit sales, automotive margins were 26.2%, notwithstanding the +5% rise in the average selling price of a Tesla vehicle.
Raw materials prices and labor costs have been on the rise over the past year. Nickel, which is a key material in electric vehicle manufacturing is around +20% higher, at $21,200 per ton on the London Metals Exchange. Battery-grade lithium carbonate prices have increased +60% from early 2021 levels.
The quarter ending June saw a -17.7% decrease in Tesla deliveries from the previous period to 254,695 units. The company faced chip shortages, supply chain disruptions, and a 22-day shutdown at its gigafactory in Shanghai during the quarter.
In April, Tesla had mentioned that inflation’s effect on costs has been a factor behind adjustments in our product pricing, despite its efforts at reducing manufacturing costs where possible. The company has since implemented layoffs in California and raised prices for its Model S and Model Y sedans.