Tesla shares were all over the place on Monday ahead and after the release of the electric vehicle maker’s March quarter results.
Ahead of the post market close results release, the shares ended up 1.2%, but in the wake of the release of solid figures, the shares dipped more than 3% in an early negative reaction before recovering some of the loss to end down around 1.8%.
That was despite the company reporting record net income of $US438 million during the quarter and a 74% jump in revenue for the quarter from a year earlier to $US10.39 billion.
Tesla’s quarterly kicks off a big week for megatechs (as we pointed out on Monday).
Alphabet, Facebook, Apple and Amazon are all due to report March quarter performances this week. But don’t forget reports from oil majors like Shell, BP, Exxon Mobil and Chevron which will do a lot to boost overall revenue and earnings gains for the S&P 500 for the quarter.
In its earnings release, the company said it has weathered chip shortages that have plagued the car industry, in part, by “pivoting extremely quickly to new micro-controllers, while simultaneously developing firmware for new chips made by new suppliers.”
Elon Musk’s electric vehicle business had reported in the first-quarter record vehicle sales of 184,800 deliveries Model 3 and Model Y cars, beating expectations.
However, the company also said it produced none of its higher-end Model S sedans or Model X SUVs for the period ending March. (It delivered 2,020 older Model S sedans and Model X SUVs from inventory.)
The company said it expects more than 50% vehicle delivery growth in 2021, which suggests minimum deliveries of 750,000 vehicles this year. If it happens it will be mostly due to the new car making plant in Shanghai coming on stream.
Analysts pointed to a major negative for the company – it is not meeting customer service expectations which is leading to more and more complaints – something founder Elon Musk seems to be ignoring.
Tesla grew vehicle unit sales by more than 100% year over year but only grew service centres by 28% and its mobile service fleet by 22%. That helps explain why some Tesla customers face frustratingly long wait times for repairs. Service expansion is not keeping pace with the volume of vehicles sold.
It also repeated CEO Elon Musk’s frequent claim that cameras, not radar, are a better path toward autonomous vehicles. “Our AI-based software architecture has been increasingly reliant on cameras, to the point where radar is becoming unnecessary earlier than expected.”
“As a result, our FSD team is fully focused on evolving to a vision-based autonomous system and we are nearly ready to switch the US market to Tesla Vision,” the company said in the earnings release.
This is an increasingly contentious issue in the electric vehicle and self-driving vehicle sectors.
Share ride group, Lyft reported earlier on Monday that it had followed Uber out of the self-driving autonomous vehicle by selling its business to Toyota for $US6550 million.
Lyft says the sale will reduce costs and bring it to a break-even profit position by the third quarter of this year (or even a small profit).
The company revealed in February it purchased $US1.5 billion in bitcoin and could invest in other cryptocurrencies in the future. By April, bitcoin rose to record levels before pulling back. In the earnings release, the company said it recorded a net cash outflow of $US1.2 billion related to bitcoin during the quarter.
Alphabet has pushed its Waymo business out into a standalone stance with outside investors funding much of the work and reducing the drain on Alphabet’s balance sheet.
Tesla’s strong financial start to the year comes as it faces challenges in other areas – especially the self-driving feature on its vehicles.
Federal auto-safety officials in the US are investigating the fatal fiery crash of a Model S sedan earlier this month in Texas. Neither of the victims was found in the driver’s seat, local officials have said which has puzzled investigators and seen the probe stepped up.
That is one of two dozen accidents involving Tesla cars that national safety officials are investigating.