Tesla extended its earnings streak for an eighth consecutive quarter, the longest stretch of profitability in company history, posting the highest net income in company history on higher sales of Model 3 and Y electric vehicles and, as always, lucrative pollution credits.
The Palo Alto, California-based company led by billionaire entrepreneur Elon Musk said net income for the quarter that ended June 30 was $1.12 billion, a tenfold increase from $104 million a year ago. Earnings per share were $1.02, beating a consensus expectation for net income of $600 million, according to FactSet. Sales for the quarter that ended June 30 were also a best-ever $11.96 billion, nearly double the $6 billion of the year-earlier quarter. Analysts expected $11.4 billion.
Sales of electric vehicles grew significantly in the quarter to 201,250, though the company’s sales of pollution credits needed by other automakers to comply with California, U.S. and European emissions rules were below the levels of a year ago and 2021’s first quarter. That particularly impactful source of revenue—it’s essentially free money—was down 17% from a year ago at $354 million and totaled $872 million for the first half.
“In the second quarter of 2021, we broke new and notable records. We produced and delivered over 200,000 vehicles, achieved an operating margin of 11.0% and exceeded $1B of GAAP net income for the first time in our history,” Tesla said in a statement. “Public sentiment and support for electric vehicles seems to be at a never-before-seen inflection point.”
The first half of the year saw production expand globally owing to the continued ramp-up of sales in China, a year after Tesla began building Model 3s in that market. Still, “supply chain challenges, in particular global semiconductor shortages and port congestion, continued to be present in Q2,” the company said. “With global vehicle demand at record levels, component supply will have a strong influence on the rate of our delivery growth for the rest of this year.”
Despite delays with its new German plant, the company said it remains “on track to build our first Model Y vehicles in Berlin and Austin in 2021.” It also said it has delayed the launch of its Semi truck, initially due by late 2019, to 2022.
The company’s cash and equivalents declined to $16.2 billion at the end of the quarter, due mainly to $1.6 billion of debt and finance lease repayments of $1.6 billion. Free cash flow was $619 million in the quarter. Tesla also said it had an impairment of $23 million from its Bitcoin investment.
The cryptocurrency loss was “much lower than many had feared with worries this number could be in the $75 million+ range heading into the print,” Wedbush equity analyst Dan Ives said in a research note. “Overall, a bullish print that should start to change sentiment on this core EV name to play the green tidal wave for the coming years.”
Musk and other executives will discuss the quarter and outlook for the rest of 2021 with investors and analysts later today.
Tesla shares rose 2.2% to close at $657.62 in Nasdaq trading Monday, before results were released.
(Updates to follow.)