Tesla Hit $3.3 Billion Profit in the 1st Quarter of 2022

Elon Musk's leading electric car company, Tesla, achieved $3.3billion quarterly profit in the first three months of 2022.

Customers are willing to pay more despite inflation, pandemic and the cost of living crisis.

Tesla has posted record profits once again, overcoming supply chain issues that have dogged the broader auto industry to blow away Wall Street's forecast for the company for the first quarter of 2022.

Revenue of $18.8 billion easily topped forecasts, rising 6% from the fourth quarter sales and 81% from the year ago total. Demand for its cars was so strong that the days supply of vehicles it had available for customers fell to only three days.

Tesla's cheapest car, a Model 3, now costs $46,990, up 34% from three years ago. The company raised its prices in the face of higher raw material costs.

What Makes Tesla So Successful?

Tesla has not only made electric cars viable, it also made them desirable. Tesla doesn't advertise its products, instead it relies on word of mouth.

It also transformed the auto industry and made Elon Musk the richest man on the planet with an estimated net worth of more than $260bn.

Tesla has reinvented the designing, building and selling of cars.

Unlike previous electric cars, Tesla was the first to use lithium-ion batteries of the sort found in laptop computers: its engineers developed their own innovative battery packs. Tesla has factories in the US and China, as well as huge new plants in the works in Germany and Texas. 

Elon Musk aims to create more affordable electric car options to attract a broader customer base.

Tesla is Doing Well Despite Global Supply Chain Issues

Covid-19 and the war in Ukraine have been weighing on Tesla's supply chain and factory operations. Despite Tesla's Shanghai plant being shut down for a couple of weeks in April due to Covid lockdowns there, and several suppliers also having to shut down, Elon Musk argues that the factory should still exceed production level.

Prices of some raw materials have increased multiple-fold in recent months. The inflationary impact on its cost structure has contributed to adjustments in the company's product pricing.

Even with supply chain issues the company earned adjusted income of $3.7 billion, much higher than the $2.6 billion forecast by analysts surveyed by Refinitiv.

Why Electric Cars Are the Future 

Electric cars have the potential to reduce emissions and help to address climate change. We will likely see them replace combustion engines in many instances. However, it needs an effort across many different areas to create a sustainable future.

Governments from all around the world have introduced regulations and incentives to accelerate the shift to sustainable mobility. 

The European Union presented its “Fit for 55” program, which seeks to align climate, energy, land use, transport, and taxation policies to reduce net greenhouse gas emissions by at least 55% by 2030, and the Biden administration introduced a 50 percent electric vehicle (EV) target for 2030.

Electrification will play an important role in the transformation of the mobility industry and presents major opportunities in all vehicle segments, although the pace and extent of change will differ.