Tesla sells 75 percent of its holdings in bitcoin

DETROIT

Tesla reported solid quarterly earnings on despite a hit from Covid-19 lockdowns in Shanghai that Elon Musk said prompted the company to liquidate most of its bitcoin holdings.

The electric vehicle maker reported second-quarter profits of $2.3 billion, about twice that in the year-ago period as the automaker lifted car prices to “embarrassing” levels, as Musk put it.

During the quarter, Tesla liquidated about 75 percent of its holdings in bitcoin, the value of which has declined sharply in 2022.

The moves on bitcoin resulted in one-time costs of $106 million, said Chief Financial Officer Zachary Kirkhorn.

Musk attributed the move to the need to raise cash because of the uncertainty of when Shanghai operations would return.

The sale “should not be taken as some verdict on bitcoin,” Musk said .    

But cryptocurrency is a “side show to the side show” compared with the goal of accelerating the energy transition, said Musk, who pointed to the scorching heat now plaguing many countries as underscoring the need for change.

Although Tesla profits topped estimates, they lagged behind those in the first quarter, the first sequential profit drop since late 2020, which coincided with a fall in automotive profit margins due to rising costs.

And while revenues jumped 42 percent to $16.9 billion, they came in below the $17.1 billion projected by analysts.

The company cited the drag from Shanghai, where its factory was shuttered for part of the quarter. Tesla said supply chain challenges remain an ongoing headache, as factory shutdowns, labor shortages, logistics and other issues “limited our ability to consistently run our factories at full capacity.”