Tesla bucks chip shortage woes with another profitable quarter

The Verge - Wed Oct 20 20:17

Tesla’s record third quarter brought its biggest three-month windfall ever, as the company announced Wednesday that it turned a $1.6 billion profit. That’s despite a global semiconductor shortage and delays in the rollout of the refreshed Model S sedan and Model X SUV.

Tesla turned that profit on just over $13.7 billion in revenue, and did it while its average sales price continued to drop due to the increasing popularity of the more affordable Model 3 sedan and Model Y SUV. Tesla has also continued to increase the profitability of those vehicles — the company said Wednesday that the gross margin on its cars is up to nearly 30 percent.

Tesla’s success in the quarter stands in stark relief from the trouble other automakers have faced thanks to the chip shortage and larger global supply chain crunches. General Motors’ sales in the US dropped 33 percent compared to the same period last year, while Ford’s dropped about 27 percent. Tesla, meanwhile, increased its global deliveries to more than 241,000 in the quarter, continuing the automaker’s steady growth.

By sourcing different chips and rewriting software on the fly to make them work, Tesla was able to avoid the same kinds of major headaches caused by the shortage. But its success in 2021 is also thanks to increased popularity of the Model Y SUV — which it just started selling in Europe and the UK — as well as a growing global presence. The company’s factory in China has been pumping out vehicles for more than a year now, and it has two more scheduled to come online in the near future in Texas and Germany. In fact, Tesla said Wednesday that it is already making some pre-production vehicles at the Austin, Texas factory.

“A variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed. We believe our supply chain, engineering and production teams have been dealing with these global challenges with ingenuity, agility and flexibility that is unparalleled in the automotive industry,” the company wrote.

It wasn’t just a financially good quarter for Tesla, it was also a very busy one. In August, the National Highway Traffic Safety Administration opened a probe into the company’s Autopilot driver assistance system and its tendency to crash into parked emergency vehicles, and two senators followed that by asking the FTC to also investigate. The Cybertruck and the next-gen Roadster were both delayed.

Tesla also held an “AI Day” event where CEO Elon Musk detailed its artificial intelligence efforts and announced the company is starting to work on humanoid robots. Tesla said Wednesday that AI Day served its purpose as a recruiting event because it sparked an “overwhelming number of applications”.

In September, the new head of the National Transportation Safety Board said she wanted Tesla to address “basic safety issues” with its “Full Self-Driving” beta software before releasing it to more owners. Tesla went ahead and released it anyway — though it created a so-called “Safety Score” evaluation process that only allows drivers who drive a certain way to access the beta software. Tesla made owners sign nondisclosure agreements that discouraged them from sharing footage of the software performing poorly. But then Musk, speaking at Recode’s annual Code Conference, said owners weren’t following those instructions and backed off the practice.

And just after the quarter ended, Musk announced that he was moving Tesla’s headquarters to Austin, Texas.