Tesla is starting to motor as profits roll in

Sales at electric-car maker Tesla reached almost $12bn in the second quarter of 2021, nearly double the level of a year ago.

A Tesla electric car
(Image credit: © Tesla)

Tesla is roaring ahead, says Lex in the Financial Times. Sales reached almost $12bn in the second quarter, nearly double the level of a year ago, while operating profits tripled to $1.3bn. Tesla “benefited from higher sales volumes and reined in its operating costs”. Tesla also seems optimistic about the future, as it has already announced “robust” deliveries of new vehicles for the second quarter, despite supply-chain problems.

The latest figures suggest that Tesla “has finally joined the grown-ups”, says Antony Currie on Breakingviews. Its pre-tax profit margin of 11% rivals Toyota and General Motors (GM). Still, this doesn’t mean the shares are worth buying. They look wildly overvalued at 115 times forward earnings. Meanwhile, the group is facing growing competition from both “established manufacturers”, such as Volkswagen, Ford Motor and GM, and “young start-ups” such as Lucid. Tesla may have avoided the fate of other electric carmakers, such as Faraday Future, Fisker Automotive and Lordstown Motors, which either went bankrupt or failed to break through, but even CEO Elon Musk accepts that Tesla’s future may not be as rosy as its past, says Io Dodds in The Daily Telegraph.

He warned against complacency, cautioning that “the seeds of defeat are sown on the day of victory”. In particular, he admitted that Tesla was vulnerable to further supply-chain pressures, while Tesla continues to experience “repeated turbulence” in China due to a series of protests by consumers about “alleged safety errors”.

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Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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