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FT article:
Tesla is still struggling to generate consistent profit margins from selling its electric cars, leaving it reliant on sales of regulatory credits to lift its profits, according to figures released late on Wednesday.
The US electric car maker reported results that topped Wall Street’s expectations for revenue growth in the final quarter of last year but failed to hit forecasts for earnings, sending its shares lower in after-hours trading.
Tesla’s profit margins in the latest quarter were also held down by $267m in stock-based compensation paid to Mr Musk, tied to the giant pay package that was approved by shareholders three years ago.
The weaker margins highlight the urgency for Tesla of lifting global sales before a new wave of competition hits the electric car market, said Nicholas Hyett, an analyst at Hargreaves Lansdown. Profits from sales of regulatory credits are also likely to fall, adding to the pressure, he added.
In the latest period Tesla generated $401m from sales of credits, accounting for the bulk of its $575m of operating profits. Tesla sells carbon credits to other carmakers that need to comply with environmental regulations.
Tesla’s shares have risen tenfold since March last year to value the company at $816bn. The strong rally was underpinned by its success at maintaining its production and sales growth last year, at a time when other carmakers were struggling — though the latest earnings news trimmed 5 per cent from its share price late on Wednesday.