Tesla announced this week that its second quarter revenue rose 42% over last year. Tesla also announced nearly 60% jump in adjusted earnings per share. These numbers come despite production disruptions in China because of the COVID lockdown and high costs associated with new production plants in Texas and Germany.
Tesla sales are really strong in a really difficult time especially when their main plant in Shanghai, China was shut for most of this year due to COVID lockdown restrictions. Tesla is also facing all the supply chain disruptions that all vehicle manufacturers are facing. There are such high expectations for Tesla to succeed and so far they are living up to investors’ expectations.
Wall Street investors are hoping Tesla can keep up with vehicles sales of 1.5 million per year that Tesla had predicted. Tesla has to increase their production facilities by 70% in the second half of this year to make up such numbers. Elon Musk was uncharacteristically very cautious in predicting sales as he said that Tesla is preparing for next two to three difficult quarters to achieve full production capacity.
Even though the demand for electric vehicles is incredibly strong, the production costs are increasing steadily due to high inflation rates. Tesla is hoping that due to high costs and fragile economy the demand for electric vehicles does not decrease.
The electric vehicle industry is preparing for a nervous second half of the year. Despite Tesla having excess demand for its vehicles, other manufacturers are gradually witnessing stagnation or reduction in demand.