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Technology

Tesla makes record profit despite China headwind and chip crunch

Shanghai factory becomes company's main vehicle export hub

Tesla CEO Elon Musk will no longer attend every earnings call, starting next quarter, the tech billionaire announced Monday.    © Reuters

PALO ALTO, U.S. -- Tesla reported record profit for the second quarter on Monday, defying supply challenges and headwinds in China.

For the three months ended June, Tesla reported $11.96 billion in revenue, up 98% year over year. The Elon Musk-led EV maker registered a record net profit of $1.14 billion in the quarter, nearly ten times the $104 million during the same period last year. It is the first time Tesla reached $1 billion in net income and its eighth sequential profitable quarter.

In the quarter Tesla delivered 201,250 cars, also a record, thanks to strong demand from China for the Model Y made in Shanghai.

The company does not break down deliveries by country. However, according to the China Passenger Car Association, Tesla sold 92,463 cars in China during the second quarter.

The strong performance in China is partly due to Tesla having cut the starting price of a standard range version of Model Y to 276,000 yuan ($42,570) in June.

In addition to being the leading growth market for Tesla, China has also become the key vehicle export center, supplanting the company's factory in Fremont, California. Tesla exported more than 30,000 Shanghai-made vehicles in the second quarter, according to the China Passenger Car Association.

"Due to strong U.S. demand and global average cost optimization, we have completed the transition of Gigafactory Shanghai as the primary vehicle export hub," the company said in its earnings release.

However, the past quarter was not a smooth ride for Tesla in China due to production and reputational challenges.

In June Tesla carried out a remote recall of nearly 300,000 China-made and imported Model 3 and Model Y cars for an online software update related to assisted driving. The Chinese regulator said the move was linked to an assisted driving function that can be activated by drivers accidentally, causing sudden acceleration.

The recall followed several safety investigations launched by Chinese regulators after Tesla owners claimed the vehicles were to blame for accidents.

Meanwhile supply chain challenges, in particular the global chip shortage, led to minor production interruptions in Shanghai.

"The chip supply is fundamentally the governing factor on our output. It is difficult for us to say how long this will last because this is out of our control essentially. It does seem like it's getting better, but it's hard to predict," Tesla CEO Elon Musk said during the Monday earnings call.

Starting next quarter, Musk will no longer attend earnings calls unless there is "something really important" he needs to say, the tech billionaire announced on Monday.

Tesla shares jumped as much as 3% during after-hours trading Monday.

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