Tesla’s second quarter of 2022 ended precariously as the electric car maker reported a decline in profits after struggling to meet demand due to the closure of its Shanghai factory and problems production in new factories. The company also sold 75% of its bitcoin holdings, driving down the price of the cryptocurrency.
Tesla’s second-quarter profit fell 32% from record first-quarter levels, as the company reported net profit of $2.26 billion on Wednesday.
The earnings report comes more than a month after CEO Elon Musk said he had a “super bad feeling” about the economy and that the company needed to lay off around 10% of workers.
The company has not been immune to global supply chain issues and economic difficulties. Earlier this quarter, Tesla was forced to temporarily close its Shanghai Gigafactory to comply with pandemic lockdown restrictions, leading to a rare drop in deliveries. The company delivered 254,000 vehicles this quarter, down 18% from the previous quarter. Tesla also declared a hiring freeze and began laying off workers earlier this month, including 229 employees who worked on Tesla’s driver assistance technology, Autopilot.
Tesla released its quarterly results amid Musk’s ongoing saga with Twitter, which has sued the billionaire for reneging on his deal to buy the social media platform. A trial is due to begin in October.
In its earnings report, Tesla said the company continued to experience manufacturing slowdowns due to supply chain and other issues that limited its ability to consistently operate its factories at full capacity. While the Shanghai Gigafactory was fully and then partially shut down for much of the quarter, the company reported a record monthly production level there.
Due to uncertainty over the lifting of the lockdown in Shanghai, Musk said Tesla had unloaded 75% of its bitcoin holdings to maximize its cash position. “This should not be taken as a verdict for bitcoin,” Musk said during an earnings call on Wednesday. “We haven’t sold any of our dogecoins.”
Still, bitcoin prices fell after Tesla reported earnings on Wednesday.
However, Musk said the company is not heavily focused on cryptocurrency. It “isn’t something we think about a lot,” Musk said on the call. “It’s a side show to the side show… The fundamental good of Tesla and the reason we’re doing this is to make the day of sustainable energy come sooner. This is our goal. We are neither here nor there on cryptocurrency.
Musk also revealed that the company’s newest factories in Berlin and Texas were losing “billions of dollars right now” as supply chain issues stalled production.
“Just trying to keep the factories running for the last two years has been a very difficult thing, as the supply chain disruptions have been severe, like extremely severe,” Musk said in an interview in May. .
“The last two years have been an absolute nightmare of supply chain disruptions, one thing after another, and we’re not out of it yet.”
However, Musk seemed optimistic on Wednesday about the state of the economy in the months ahead. “I would take that with a grain of salt…I think inflation will come down towards the end of this year.”
Musk also said the company remains on track to release a beta version of full self-driving capabilities by the end of the year, despite the recent departure of key member Andrej Karpathy. Tesla Autonomous Technology Team and Senior Director of Artificial Intelligence. .
Reuters contributed reporting