Tesla Ends Streak of Record Quarterly Profits After China Factory Shutdown

The world’s most valuable car maker on Wednesday reported $2.3 billion in second-quarter profit, ahead of the $1.9 billion Wall Street was expecting but below its record quarterly profit of $3.3 billion in the first three months of the year. It generated $1.1 billion in profit during last year’s second quarter.

“It’s been kind of supply-chain hell for several years,” Chief Executive

Elon Musk

During an earnings call.

Customers, on average, paid more for Tesla’s cars during the period, helping the company generate $16.9 billion in second-quarter revenue, down from $18.8 billion in the first quarter. Analysts expected Tesla to report sales of around $16.5 billion.

According to the company, global supply-chain disruptions and labor shortages among other obstacles prevented Tesla from running its factories at their full potential.

The challenges of recent months have prompted concern among investors about Tesla’s ability to meet its 2022 production goals. Musk spoke optimistically in April. He stated that Tesla likely would produce over 1.5 million vehicles this fiscal year. That’s an increase of around 60% from last year. It also surpasses its long-term goal to increase deliveries by an average 50% each year. Wall Street has estimated that Tesla may not be able to make 1.4 million cars, but Tesla reiterated this multi-year goal Wednesday.

Tesla shares closed Wednesday afternoon at $742.50. In late trading, they were down less than 1%

According to Tesla, it sold bitcoin worth $936 million in the second quarter. It now has approximately 75% of its initial $1.5 billion position in bitcoin, leaving it with about $218 million of bitcoin at the end of June.

Musk has been vocal in his criticism of digital currencies. Tesla briefly accepted bitcoin payments for its vehicles, but ended that practice in May 2021 due to concerns about the extraction of bitcoin from fossil fuels. Mr. Musk said at the time that Tesla wouldn’t sell any bitcoin.

According to CoinDesk the price of bitcoin fell after Tesla published its results.

During the earnings call, Mr. Musk cited Covid-19 lockdowns in China, which led to the Tesla factory in Shanghai being shut down, for the company’s sale of bitcoin.

“It should be mentioned that the reason that we sold a bunch of our bitcoin holdings was we were uncertain as to when the Covid lockdowns in China would alleviate, so it was important for us to maximize our cash position given the uncertainty of the Covid lockdowns in China,” Mr. Musk said, according to a transcript on FactSet.

The company stated that foreign-exchange pressures were also impacting results. This was evident in the strong dollar’s performance against other currencies.

Tesla has laid off staff in recent weeks, after Mr. Musk told employees in June that the company had “become overstaffed in many areas.”

Tesla’s stock price has fallen by around a third in 2022 amid a broader drop in equities and certain company-specific headwinds. Late May, Musk revealed that Tesla had difficulties getting two new factories up and running in Germany and Texas. At the time, he called the plants “gigantic money furnaces.”

According to the company, it delivered 254,695 vehicles in the three months ending in June to customers, a decrease of 310,048 vehicles in the first quarter. Deliveries were up roughly 27% from last year’s second quarter, helped by the fact that Tesla reached a monthly production record in June, the company has said.

Musk is currently in legal trouble over his $44B deal to acquire the company

Twitter Inc.

A Delaware judge on Tuesday agreed to Twitter’s request to fast-track a lawsuit seeking to compel Mr. Musk to consummate his purchase of the social-media company.

Tesla is like many others in the auto industry. They have been increasing prices as their suppliers demand more. U.S. customers who ordered the long-range version of Tesla’s Model Y compact sport-utility vehicle in late June could expect to pay around $68,000, or some $14,000 more than they would have if they ordered the model a year earlier, according to Bernstein Research.

“If inflation calms down, we can lower prices for cars,” Mr. Musk said last week on Twitter.

The chip shortage is having a greater impact on Tesla’s energy business than its car business, the company said.

It added 250 fast-charging points to its global network in the second quarter. It had been in the plans to make it available to electric vehicles from other manufacturers.

Tesla, which is still in an aggressive phase to ramp up production, also stated that its global capacity for making cars has increased since last quarter. The Shanghai plant, Tesla’s busiest, can crank out more than 750,000 cars a year, up from a pace of over 450,000 three months earlier. There, Tesla produces Model 3 sedans as well as Model Y crossover cars. Each of the Model Ys produced at the new Austin and Berlin plants has a combined annual production capacity of over 250,000 units. Tesla’s original plant in Fremont, Calif., now has capacity to produce 550,000 Model 3s and Model Ys annually, 50,000 more than the company said three months ago. It can also produce 100,000 Model S luxury sedans, and Model X SUVs together, which is unchanged from before.

Send an email to Rebecca Elliott at rebecca.elliott@wsj.com