Tesla reports $1 billion in profit, with sales almost doubling in the last quarter

 

Tesla turned in some solid numbers for its quarterly earnings Monday, reporting more than $1 billion in net income — 10 times more than in the same time last year — and vehicle sales that almost doubled for the three months that ended in June.

"Public sentiment and support for electric vehicles seems to be at a never-before-seen inflection point," Tesla wrote in its second-quarter letter to investors.

But while there is little doubt that the California-based automaker is benefiting from surging demand for electric vehicles, it does face a number of challenges. Most immediately, they include the shortage of microchips that has hammered industry production plans, leading a number of key competitors, such as Ford, to warn of big hits to earnings in the second quarter and beyond.

Tesla has already reported that production topped 206,000 vehicles during the second quarter despite the shortage, but CEO Elon Musk issued a cautionary note last month when he said the company's "biggest challenge is supply chain, especially microcontroller chips."

"Never seen anything like it," he said. "Fear of running out is causing every company to over-order — like the toilet paper shortage, but at epic scale."

Tesla has now reported its seventh consecutive quarterly profit. Most of what it earned previously came from the sale of zero-emission vehicle credit to competitors. Those sales are expected to slip as other manufacturers launch their own EVs. But Q2 suggested Tesla won't need to rely on ZEV credits much longer, with the unexpectedly strong earnings coming almost entirely from retail sales of its EVs.

In Tesla's early years, Musk said his biggest goal was to push for a massive transformation of the global auto industry. There is no question that has happened. In recent months, automakers have lined up to announce massive electrification plans. Mercedes-Benz last week said it plans to sell nothing but battery-electric vehicles by 2030. Stellantis, the giant formed by the merger of Fiat Chrysler Automobiles and France's PSA Group, outlined aggressive targets of its own just the week before.

Demand is already rising quickly in Europe and China, the world's two largest markets for electric vehicles. But even in the U.S., electric car sales doubled during the first half of this year, with Tesla dominating the market.

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