Tesla edges past Wall Street revenue target, boosted by regulatory credits, China demand

Elon Musk Tesla

(Reuters) -Electric carmaker Tesla Inc marginally beat Wall Street expectations for first-quarter revenue on Monday boosted by a jump in environmental credit sales to other automakers and robust demand from China.

Sales of regulatory permits were higher than quarterly profit, in line with the trend of several quarters, and net profit was dented by a $299 million award to Chief Executive Elon Musk.

“Higher regulatory credits, lower taxes, and bitcoin sales buoyed financial results. Back these out, and it was a large miss,” Roth Capital Partners analyst Craig Irwin said.



Shares of the company were down about 3% in extended trading.

Tesla posted record deliveries in the first quarter despite a global chip shortage that has slammed auto sector rivals. Model Y production in China has spurred demand there.

Still, the world’s most valuable automaker, whose shares jumped more than eight-fold last year, faces challenges of living up to its valuation and managing expectations.

“Tesla looks well positioned to continue delivering more vehicles in the future as more production plants come online which, in turn, could see the company reign in the ludicrous valuation metrics that it currently possesses,” said Peter Hanks of DailyFX.com.

The company said it was able to navigate through global chip supply shortage issues in part by pivoting quickly to new chips, while simultaneously developing software for chips made by new suppliers.

However, its vehicle average selling price fell by 13% as production of pricier Model S and Model X vehicles ground to a halt ahead of major updates.

Tesla said first deliveries of the new Model S should start shortly, while Model Y production rate in Shanghai continued to improve.

Tesla said it expects this year’s volume growth to exceed 50%, while saying that it is on track to start production and deliveries at its planned factories in Texas and Berlin this year.

In the United States, its full self-driving software is facing new federal investigations following 28 crashes of Tesla vehicles, including a recent fatal one in Texas that killed two.



And in China, home to Tesla’s second vehicle factory, Tesla has been under growing pressure from the government and public after a woman protested alleged brake problems during the Shanghai auto show.

Adding to the headwinds, refreshed versions of the pricier Model S sedan and Model X SUV have been delayed at a time when established rivals such as Volkswagen and Ford Motor Co are rolling out all-electric vehicles, aiming to compete on price and style.

Tesla, led by billionaire entrepreneur Elon Musk, said revenue rose to $10.39 billion from $5.99 billion a year earlier.

Analysts had expected revenue of $10.29 billion, according to IBES data from Refinitiv.

Tesla earned $518 million from sales of regulatory credits in the first quarter, up 46% from a year earlier. Tesla earns credits for exceeding emissions and fuel economy standards and sells them to other automakers that fall short of the goals.

Adjusted profit of 93 cents per share topped Wall Street’s consensus of 79 cents.

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