Tesla Q2 Net Profit Doubles... Ford Cuts Jobs to Go All-In on Electric Vehicles (Comprehensive)

Musk: "Bitcoin Sale Was Simply Due to Need for Cash"
Inflation Expected to Ease in Second Half... Caution Against Overinterpretation
Admits Price Increases Were Excessive, Hopes to Lower Them

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Tesla, the American electric vehicle manufacturer, reported second-quarter net profits this year that more than doubled compared to last year, surpassing market expectations. On the same day, Tesla announced it had sold 75% of its Bitcoin holdings, explaining that it was to secure liquidity in preparation for prolonged lockdowns in China.

Local media including Bloomberg and The Wall Street Journal (WSJ) reported on the 20th (local time) that Tesla's second-quarter net profit reached $2.26 billion (approximately 2.9651 trillion KRW), more than twice the $1.14 billion recorded in the same period last year. Earnings per share were $2.27, significantly exceeding analysts' expectations of $1.83.

During the same period, revenue was $16.93 billion, down 9.7% from $18.76 billion the previous year. Global vehicle deliveries totaled 254,695 units, a 27% increase compared to the same period last year, but a decrease from the first quarter's 310,048 units. This marks the first decline in deliveries quarter-over-quarter in two years.

In the second quarter, Tesla faced production disruptions due to COVID-19 lockdowns and supply instability at its Shanghai factory in China, but it is evaluated to have increased profits by raising electric vehicle prices. Tesla CEO Elon Musk stated during a conference call that "we cannot continue to raise prices at a high level" and expressed hope to lower them. He added, "We have raised prices quite a bit, and honestly, Tesla prices are at an uncomfortable level," while also noting, "We have experienced significant supply chain and production shocks, as well as tremendous inflation." However, he cautioned against overinterpretation, saying, "I am hopeful about (price reductions), but this is neither a promise nor anything definite."

CEO Musk also viewed production issues as a bigger challenge Tesla faces than demand reduction due to a global economic recession. He said, "Many models have long waiting times, and some require waiting until next year," adding, "Demand is not much of a problem for us." Earlier in April, he predicted the company would produce over 1.5 million vehicles this year, but production through the first half reached only 564,000 units.

Regarding inflation, Musk mentioned the possibility of easing toward the end of this year, emphasizing that "economic forecasting inherently involves errors," urging not to place too much significance on it. He also noted that while prices of some commodities like aluminum and carbon steel are declining, prices of others, including lithium, remain high, stating, "I want to once again urge entrepreneurs to enter the lithium refining business."

On the same day, Tesla revealed that it had sold about 75% of its Bitcoin holdings during the second quarter, converting them into fiat currency, which added $936 million in cash to its balance sheet. CEO Musk explained, "Because it was uncertain when China's lockdowns would ease, it was important to maximize our cash position considering that," and added, "We are open to increasing our Bitcoin holdings in the future." He further clarified, "This (liquidation) should not be interpreted as any judgment on Bitcoin," and noted, "We did not sell Dogecoin."

[Image source=Reuters Yonhap News]

On the same day, reports citing anonymous sources stated that Ford Motor Company plans to lay off up to 8,000 employees from its internal combustion engine business unit, 'Ford Blue,' to fund its entry into the electric vehicle market.

This is interpreted as part of Ford CEO Jim Farley's plan to reduce costs by $3 billion by 2026. He had expressed a desire to transform Ford Blue into "a profit and cash engine for the entire company." He previously mentioned that workforce reduction is key to increasing profits and emphasized at a conference last February that "there are too many people." Although the layoff plan is not yet finalized, insiders indicated that layoffs could begin gradually this summer.

Earlier in March, CEO Farley announced plans to increase spending on the electric vehicle sector to $50 billion and to raise U.S. electric vehicle sales from 27,140 units last year to 2 million units annually by 2026. Last month, Ford's electric vehicle sales surged 76.6% year-over-year, driven by the launch of the F-150 Lightning pickup truck.

This content was produced with the assistance of AI translation services.