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Tesla Is Bracing For A Drop In Earnings, But The EV Delivery Projection Remains Critical

Tesla Is Bracing For A Drop In Earnings, But The EV Delivery Projection Remains Critical
The stresses of China's COVID-19 lockdown and postponed installation of new facilities are expected to show up in Tesla Inc's second-quarter results on Wednesday. Investors want to know if the year will end on a high note.
Tesla has begun layoffs, as planned by CEO Elon Musk, who stated in June that he had "a extremely awful feeling about the economy." He has also claimed that Tesla's new plants in Austin, Texas, and Berlin are "giant money furnaces" that are losing billions of dollars.
Concerns about increased competition from electric car companies, as well as COVID-19 in Shanghai, home to Tesla's China factory and its suppliers, are also factors.
"The expectations are very low for the quarter. The key to this is what they're going to say going forward because expectations for the second half of this year are very strong for this company," Curzio Research CEO Frank Curzio said.
Analysts estimate the electric vehicle industry leader to report second-quarter revenue of $17.23 billion, an 8 per cent decrease from the previous quarter's record high. According to Refinitiv statistics, analysts predict an adjusted profit of $1.86 per share, a 42 per cent decrease from the previous year.
Musk indicated in April that Tesla might increase deliveries by 60 per cent this year, resulting in over 1.5 million vehicles, but Wedbush analyst Daniel Ives said many analysts expect closer to 1.4 million deliveries and will want to hear whether Musk is still positive on demand in the face of recession fears.
In the first half, Tesla delivered 564,743 automobiles. It delivered 17.9 per cent less EVs in the second quarter than the previous quarter due to China's COVID 19-related factory and supply disruption.
Early in the pandemic, Tesla addressed supply-chain issues better than competitors, according to Deutsche Bank analyst Emmanuel Rosner, and high prices and cost-cutting might help Tesla pleasantly surprise investors.
Tesla's Model Y long-range variant costs currently $65,990, up more than 30% from the beginning of 2021.
The second-half output outlook will be heavily influenced by the factory in Shanghai, which has just emerged from a two-month lockdown and is now again fighting to contain a recurrence of COVID-19.
The competitive environment is also heating up.
Herbert Diess, CEO of Volkswagen AG, predicts a solid second half of 2022 and expects progress in catching up with Tesla due to reducing chip shortages.
Meanwhile, Musk said in June that "Hyundai is doing really well," referring to the South Korean automaker, which has been gaining market share in the United States.
Musk may also need to discuss concerns other than production and demand, such as his attempt to back out of a deal to buy Twitter Inc.
Other difficulties include progress on Tesla's aim to reach full self-driving after a high-profile executive resigned, and work on Tesla's new batteries, which are needed to enhance output at its Texas factory.
According to analysts, the value of Tesla's bitcoin holdings has dropped and may result in impairment charges totaling hundreds of millions of dollars.

Christopher J. Mitchell

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