Tesla sells 75% of its bitcoin as profits slump due to production challenges - THE GUARDIAN UK
EO Elon Musk said the cryptocurrency sale was to maximize its cash position only, but prices still slid after Wednesday’s report
Tesla’s second quarter of 2022 came to a shaky end as the electric carmaker reported a drop in profit after it struggled to meet demand due to a shutdown of its Shanghai factory and production challenges at new plants. The company also sold 75% of its bitcoin holdings, leading to a slide in the cryptocurrency price.
Tesla’s second-quarter profit fell 32% from record levels in the first quarter, with the company reporting a $2.26bn net profit on Wednesday.
The earnings report comes more than a month after CEO Elon Musk said he had a “super bad feeling” about the economy and that the company needed to lay off about 10% of salaried workers.
The company has not been immune to global supply chain issues and economic woes. Earlier this quarter, Tesla was forced to temporarily shut down its Shanghai Gigafactory to comply with pandemic lockdown restrictions, which led to a rare drop in delivery numbers. The company delivered 254,000 vehicles this quarter, down 18% from the previous quarter. Tesla also declared a hiring freeze and began laying off workers earlier this month, including 229 staffers who worked on Tesla’s driver assist technology, Autopilot.
Tesla reported its quarterly earnings against the backdrop of Musk’s ongoing saga with Twitter, which sued the billionaire for reneging on his agreement to purchase the social media platform. A trial is set to begin in October.
In its earnings report, Tesla said the company continues to experience manufacturing slowdowns due to supply chain and other issues which limited its ability to consistently run its factories at full capacity. While the Shanghai Gigafactory was fully and then partially shut down for much of the quarter, the company reported a record monthly production level at that location.
Due to uncertainty about when the lockdown would lift in Shanghai, Musk said Tesla unloaded 75% of its bitcoin holdings to maximize its cash position. “This should not be taken as some verdict of bitcoin,” Musk said in a Wednesday earnings call. “We haven’t sold any of our dogecoin.”
Still, bitcoin prices slid after Tesla reported its earnings on Wednesday.
However, Musk said the company is not heavily focused on cryptocurrency. It “is not something we think about a lot”, Musk said on the call. “It’s a side show to the side show … The fundamental good of Tesla and the reason we’re doing this is to have the day of sustainable energy come sooner. That’s our goal. We’re neither here nor there on cryptocurrency.”
Musk also revealed that the company’s newest factories in Berlin and Texas are losing “billions of dollars right now” as supply chain issues stalled production.
“Just trying to keep the factories operating the last couple years has been a very difficult thing, like supply chain interruptions have been severe, like extremely severe,” Musk said in a May interview.
“The past two years have been an absolutely nightmare of supply chain disruptions, one thing after another, and we are not out of it yet.”
However, Musk seemed optimistic on Wednesday about the state of the economy in the coming months. “I would take this with a grain of salt … I think inflation will decline towards the end of this year.”
Musk also said the company remains on track to release a beta of full self-driving capabilities by the end of the year, in spite of the recent departure of Andrej Karpathy, a key member of Tesla’s autonomous technology team and the senior director of artificial intelligence.
Reuters contributed reporting