Tesla States It Made $3.3 Billion in Profits in Q1 2022, Analysts Are Skeptical

Tesla Giga Gruenheide 9 photos
Photo: Tesla
Difference between Model Y without and with mega castingsTesla Giga AustinTesla Giga AustinTesla Giga AustinTesla Giga AustinTesla Giga GruenheideTesla Giga GruenheideTesla Giga Gruenheide
Tesla opened two new factories in Q1 2022. Giga Grünheide started to operate in March, and Giga Austin in April. It is still too early to see the impact they will have on the company, but Tesla had good results to celebrate: $3.3 billion in profits from total revenue of $16.8 billion. If those numbers are accurate, that’s not bad.
Relatively speaking, that profit represents an increase of 658% compared to Q1 2021, when Tesla had a net income of $438 million. Considering it also had $518 million in carbon credits, profits came from this government’s help.

In absolute terms, this result corresponds to a bit more than a third of the operating profit Volkswagen believes it will present on May 4, 2022 – €8.5 billion, or $9.19 billion at the current exchange rate. If you avoid considering the regulatory credits of $679 million that Tesla received, that’s less than a third. Yet, Tesla has a market cap that is 6.6 times that of the German carmaker.

The American EV maker made 305,407 new cars in Q1 2022, which is a lower number than it manufactured in Q4 2021, with 305,840 vehicles. Despite that, Tesla claims to have had a better result thanks to lower operating expenses: 1.857 billion in Q1 2022 against 2.234 billion in Q4 2021. All that with the supply chain crisis, higher inflation, and a lot of pressure on raw material prices that also happen independently of inflation due to higher demand. Some market analysts said something was wrong. They also doubt the 19.2% operating margin.

GLJ Research did not hold back on words and said in a report published on April 21 that Elon Musk must have lied when he said Tesla production in Q2 2022 would be similar to that in Q1. The market research company also brought up the costs of putting two new factories to work. Until they reach their maximum manufacturing capacity, it would be expensive to ramp up, which would necessarily show up in operating expenses.

Tesla is indeed cutting costs aggressively, such as charging for the mobile connectors instead of shipping them for free with new cars. These very measures make people doubt the company is having such bright results as the earnings call presented. Some think these measures were not put in place because Tesla wants to maximize results. The reason would be a desperate need for cash.

At the Q1 2022 earnings call, Musk kept making promises about the humanoid robot, a new dedicated robotaxi, and that Tesla will eventually sell 20 million cars per year. When asked about FSD progress and metrics that could support the claim that it is improving, he seized the opportunity to try to sell more of these beta software $12,000 packages. According to the Tesla CEO, the best way to have information about progress is by paying for it.

Even those who did that a long time ago are not very optimistic about it. Galileo Russell recently tweeted that he was not convinced Tesla would generate revenue from an autonomous ridesharing network. He also said that “FSD development (has) been consistently overpromised and underdelivered.” There you have it: he just saved you $12,000.

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 Download: Tesla Q1 2022 results (PDF)

About the author: Gustavo Henrique Ruffo
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Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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