Tesla has drawn a lot of scrutiny lately, has run into delays with the refreshed Model S and Model X, and the auto industry is struggling through a global shortage of semiconductors. But none of those things seemed to have much effect on Tesla’s business.
On Monday, the Silicon Valley automaker announced its best-ever start to a year, despite not making a single Model S sedan or Model X SUV. That’s thanks in large part to the fact that Tesla continues to increase the number of Model 3s and Model Ys it makes and sells out of its year-old factory in Shanghai, China, validating CEO Elon Musk’s long-standing goal of localizing production in the world’s biggest markets for electric vehicles.
As a result, Tesla generated $10.4 billion in sales the first quarter, and recorded a $438 million profit. That’s basically double the revenue it generated in the first quarter of 2020, when Tesla had to temporarily shut down its factory in China due to the earliest outbreaks of the coronavirus. It’s also the most profit Tesla’s ever made in a quarter.
A record first quarter despite shutting down Model S and Model X production
This is the seventh quarter in a row that Tesla has turned a profit, though the company was once again buoyed by selling emissions credits to other automakers. Tesla said Monday that it sold a record $518 million worth of regulatory credits, meaning that it would’ve finished the quarter in the red without them. Tesla presented the growth of regulatory credit sales as a positive in the presentation it published Monday. But many close followers of Tesla have been waiting for the moment when it’s able to turn a profit based on the products it sells. This was not that moment.
Tesla also says it sold about $101 million worth of bitcoin in the first quarter. The company announced in January that it had bought $1.5 billion worth of the cryptocurrency and started allowing customers to pay for cars using bitcoin.
This all comes at a time when Tesla is facing renewed scrutiny over the safeguards, or lack thereof, that govern the use of its Autopilot advanced driver assistance feature following a fatal crash in Texas. It’s still unclear whether Autopilot was involved in that crash, which killed two men. Even if it was, it’s very possible that the feature was misused due to early police reports that there was no one in the driver’s seat — something the company warns its customers against. But Musk’s brief claims about Tesla’s ability to stop people from misusing Autopilot have some obvious holes, federal safety investigators are now digging into what happened, and the crash has the attention of multiple lawmakers.
The global chip shortage, meanwhile, has not hit Tesla as hard as it has some other automakers. The company said Monday that it was “able to navigate through global chip supply shortage issues in part by pivoting extremely quickly to new microcontrollers, while simultaneously developing firmware for new chips made by new suppliers.”
Tesla didn’t make any Model S sedans or Model X SUVs in the first quarter because the company has been readying redesigned versions of each electric vehicle, which were announced in January. Those refreshed vehicles were supposed to start shipping in March, and Musk even said at the time that they would start coming off the line in February. But the company has either run into an issue retooling the production lines at its Fremont, California factory where the Model S and Model X are made, or something else is going on.
Tesla did say Monday that the “[f]irst deliveries of the new Model S should start very shortly,” but didn’t specify what that means, or give any update on the refreshed Model X.
That Tesla had a strong quarter despite this delay is a testament to the importance of the new factory in China, as well as the general popularity of the Model 3 and Model Y. But while delays are nothing new in the world of Tesla, the company is, for now, leaving money on the table here, as the Model S and Model X generate more profit per car sold and the new versions are even more expensive. To wit, Tesla shared in January that the average selling price for all its cars dropped 11 percent in 2020 compared to 2019 because of the higher mix of Model 3 and Model Y sales.
Tesla said the average selling price declined even further in the first quarter, but that it actually increased the amount of money it’s making on each of those cars because it continues to cut the costs associated with making them. “Reducing the average cost of the vehicles we produce is essential to our mission,” the company wrote.
Things should only get better for Tesla, too. The company said it has nearly maxed out capacity at its California factory, but told investors that it expects to be able to continue increasing production each quarter in China. Tesla said it still plans to be able to start making vehicles at the factory it’s building in Berlin, Germany by the end of this year. And it has started installing some equipment at the factory it’s building in Austin, Texas. Tesla said it still expects to start making deliveries out of that factory by the end of 2021, too.