Tesla prepares to hit profits, but EV delivery outlook key

A Tesla logo is pictured on a car in the rain in the Manhattan borough of New York, New York, U.S., May 5, 2021. REUTERS/Carlo Allegri

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July 19 (Reuters) – Tesla Inc’s (TSLA.O) second-quarter results on Wednesday are expected to show the strains of China’s COVID-19 lockdown and extended start-ups of new factories. Investors want to know if the end of the year will be much better.

Tesla began layoffs, following a plan by Chief Executive Elon Musk, who said he had “a really bad feeling about the economy” in June. He also said Tesla’s new factories in Austin, Texas, and Berlin are “gigantic money furnaces” that are losing billions of dollars. Read more

Add to that concerns about growing competition from electric vehicle makers and COVID-19 in Shanghai, home of Tesla’s Chinese factory and its suppliers.

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“Expectations are very low for the quarter. The key to all of this is what they’re going to say going forward, because expectations for the second half of this year are very high for this company,” the CEO said. Curzio Research, Frank Curzio.

Analysts expect the electric vehicle market leader to post revenue of $17.23 billion in the second quarter, down 8% from the record high set in the previous quarter. Analysts also expect adjusted earnings of $1.86 per share, a 42% drop from a year ago, according to Refinitiv data.

In April, Musk said Tesla could increase shipments by 60% this year, which would translate to nearly 1.5 million vehicles, although Wedbush analyst Daniel Ives said many analysts s expect more than 1.4 million deliveries and will want to know if Musk is still optimistic about demand in a recession. fears.

Tesla delivered 564,743 vehicles in the first half. It delivered 17.9% fewer electric vehicles in the second quarter compared to the previous quarter as the COVID 19-related shutdown in China hit its factory and supply chain. Read more

Tesla handled supply chain challenges better than rivals at the start of the pandemic, and Deutsche Bank analyst Emmanuel Rosner said high prices and lower costs could help Tesla pleasantly surprise investors. .

The price of the long-range version of Tesla’s Model Y, now at $65,990, has increased by more than 30% since the start of 2021.

The production outlook for the second half will depend heavily on the Shanghai plant, which has just emerged from a two-month lockdown and is once again scrambling to contain a resurgence of COVID-19.

The competitive landscape is also heating up.

Volkswagen AG (VOWG_p.DE) CEO Herbert Diess sees a strong second half of 2022 and expects progress to catch up with Tesla as chip shortages ease. Meanwhile, Musk tweeted in June that “Hyundai is doing pretty well,” referring to the South Korean automaker gaining market share in the United States.

Musk may also need to talk about issues beyond production and demand, including his efforts to evade a deal to buy Twitter Inc (TWTR.N). Other issues include progress on Tesla’s plan to achieve full self-driving following the resignation of a top executive, and progress on new Tesla batteries needed to ramp up production at its factory in Texas. Read more

The value of Tesla’s bitcoin holdings has declined and will result in impairment charges of hundreds of millions of dollars, according to analysts’ estimates.

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Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bengaluru Editing by Ben Klayman, Peter Henderson and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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