Tesla reported a record quarterly profit as volume growth and cost reduction offset higher supply chain costs and lower regulatory credit revenue.

For the second quarter, the automaker’s (GAAP) net income was $1.14 billion, the first time it has surpassed $1 billion. Overall automotive revenue came in at $10.21 billion, of which only $354 million, about 3.5%, came from sales of regulatory credits.

Tesla was profitable without the credits, which it sells to rival automakers, for the first time since the end of 2019.

The company earned an adjusted $1.45 per share on total revenue of $11.96 billion, easily beating analysts’ estimates of $0.98 per share on revenue of $11.30 billion. It also reported $801 million in revenue from its energy business, including solar photovoltaics and energy storage systems for homes, businesses, and utilities.

“Tesla impressed with its numbers, as most of its revenue came from vehicle sales,” Jesse Cohen, senior analyst at Investing.com, said.

Tesla shares rose 2.2% to $657.62 in trading Monday. The stock has lost roughly a quarter of its value since reaching a record level in late January amid heightened regulatory scrutiny over vehicle safety and growing electric-vehicle competition.

Automakers have been hit by the global shortage of semiconductors, but Tesla CEO Elon Musk said the company managed to get by with alternative chips. “For the rest of this year, our growth rate will be determined by the slowest part in our supply chain,” he told analysts. “Chip supply is fundamentally the governing factor on our output.”

The chip supply problem is forcing Tesla to delay the launch of the Semi, its commercial truck, until 2022. The production of the Cybertruck, Tesla’s much-awaited pickup, is set to occur later this year.

Tesla’s Model Y compact SUV was the most popular all-electric vehicle in the U.S. in the first half of the year, accounting for roughly a third of sales in the category, according to Cox Automotive.

But as The Wall Street Journal reports, car buyers “have a growing array of plug-in options to choose from, thanks to the introduction of models such as Ford’s Mustang Mach-E sport-utility vehicle and Volkswagen AG’s ID.4, and Tesla’s share of the market is slipping.”

To stay ahead, Tesla is building new factories and working to refresh its higher-end models, the Journal said.

 

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