Record Q1 Revenues, Profitability Drive Tesla Expansion

Tesla is debt-free and, bankrolled in part by higher revenues generated by price increases, plans further investment in expanded production and new products, CEO Elon Musk says.

The electric-vehicle manufacturer faced lockdowns in China, shortages of semiconductors and the slow ramp-up of new plants in Texas and Germany but posted record revenues, earnings per share and automotive margins for the first quarter. Tesla remains on track for increasing vehicle deliveries to customers this year by 50% over 2021, Musk says. 

Musk tells investors and analysts during a conference call he believes Tesla could build 60% more vehicles than the 1 million it delivered in 2021 even though its Gigafactory in Shanghai was closed for nearly a month by COVID-19 restrictions imposed by Chinese authorities. But Tesla’s new Gigafactory in Berlin was producing vehicles at the end of March and its Texas Gigafactory came on line at the beginning of April. 

“The 50% growth rate remains achievable,” Musk (pictured, below left) says. Though the situation with suppliers in China is tenuous, “I think we could squeeze 60%,” he says, even if it takes nine to 12 months for the new factories to reach their production targets even though Tesla’s production and deliveries increased only 4.7% in the first quarter. 

Elon Musk 2020

With automotive gross margins reaching a record 32.9% in the first quarter, Tesla has the financial resources to invest in other projects.

These projects include an expansion of the company’s Giga Nevada battery plant and the 2024 launch of an autonomous robotaxi capable of operating without a brake pedal or steering wheel. Musk says the robotaxi will have the lowest per-mile operating costs of any existing form of transportation. “It will be cheaper than a subsidized bus ticket,” he says.  

Tesla also continues testing its “full self-driving platform,” which has come under scrutiny from NHTSA. Musk says the company’s engineers are working on coordinating the platform’s vision system with artificial intelligence so it can perform better than a human driver.  

Updates to the system are coming along every two weeks, Musk notes, adding anyone who wants to experience how the technology is working can enlist in the company’s army of “Beta Testers,” which now includes 100,000 data-generating Tesla users. 

Musk defends recent price hikes on Tesla vehicles as defensive measures aimed at countering rising logistics and raw materials costs. Prices of critical raw materials such as lithium for batteries are rising dramatically and will increase further when current supply agreements expire, which is why Tesla is increasing prices now, he says. 

Zack Kirkhorn, chief financial officer, says Tesla’s insurance business is growing rapidly. The company plans to operate it as a vertically operated subsidiary, serving as its own underwriter, and will have its own claims management system that will feed critical information back to engineers to help make Tesla vehicles safer.