Tesla profit tops target

Tesla on Wednesday reported a smaller-than-expected drop in quarterly profit, helped by a string of price increases for its cars, which Elon Musk later said were “embarrassingly high” and could hurt demand.

Tesla also sold a majority of its bitcoin holdings, which led to smaller-than-expected impairment charges caused by a decline in the value of the cryptocurrency, analysts said. CEO Elon Musk flip-flopped on a post-earnings conference call, saying at first that macroeconomic uncertainty might have some impact on demand for its electric vehicles, but when pressed for details by an analyst, he said the company did not have a demand problem but a production problem.

He said, “you can’t kind of just raise prices to some arbitrarily high level because you pass the affordability boundary and then the demand falls off a cliff.”

“(Prices) are frankly at embarrassing levels. But we’ve also had a lot of supply chain and production shocks and we’ve got crazy inflation,” said Musk who has previously spoken of “a super bad feeling” about the economy.

Tesla has raised prices several times in the past year. For instance, the US price of its Model Y long-range version is now $65,990, up more than 30 per cent since the start of 2021.

Musk said he expected inflation to start easing by the end of the year and most commodity prices to stabilize, which he hoped would allow Tesla to cut prices slightly. Shares in Tesla were up 1.7 per cent in pre-market trading on Thursday. The shares are down about 40 per cent from their peak in November.

Chief Financial Officer Zachary Kirkhorn said Tesla was still pushing to reach 50 per cent growth in deliveries this year, adding that while the target had become more difficult, “it remains possible with strong execution.”