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Tesla says supply-chain snags keeps its factories from running ‘full speed’

Tesla Inc. late Wednesday reported record quarterly profit and sales for its third quarter, but spooked investors by tweaking its outlook and saying that chip shortages, port congestion and other supply-chain and infrastructure challenges are keeping its factories from running at full speed.

Tesla
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said it earned $1.6 billion, or $1.44 a share, in the third quarter, compared with $331 million, or 27 cents a share, in the year-ago period. Adjusted for one-time items, the EV maker earned $1.86 a share.

Revenue rose 57% to $13.8 billion, from $8.8 billion a year ago.

Analysts polled by FactSet expected Tesla to report adjusted earnings of $1.62 a share on sales of $14 billion.

“A variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts have been impacting our ability to keep factories running at full speed,” the company said in a statement.

Shares of Tesla fell more than 1% in the extended session Wednesday, after ending the regular trading day up 0.2%. The shares pared some losses at last check.

Tesla removed language in its outlook that had kept it optimistic about 2021’s growth.

The EV maker has shied away from specific sales guidance this year, and on Wednesday repeated the broad goal of achieving a 50% average annual growth in sales “over a multi-year horizon.”

But it removed a sentence had led Tesla investors to believe 2021 would be even better: “In some years it may grow faster, which we expect to be the case in 2021,” which was absent from Wednesday’s third-quarter letter.

That rosier hope for this year was written in Tesla’s letters to shareholders as recently as the second quarter, and it had appeared in previous letters as well.

The company said it had $1.3 billion in operating cash flow, minus capital expenditures, in the third quarter. In total, its cash and equivalents fell by $164 million to $16.1 billion in the third quarter.

Operating profits rose mostly thanks to sales volume growth and cost reductions, but that was offset by rising expenses, lower revenue from regulatory credits, additional costs related to the supply-chain snags and a bitcoin-related impairment of $51 million, the company said.

Tesla has scheduled a call with investors at 5:30 p.m. Eastern. It will be webcast.

Tesla Chief Executive Elon Musk surprised investors earlier this month by announcing Tesla was moving its headquarters to Austin, Texas, from Palo Alto, Calif., despite its intention to continue to expand its Fremont, Calif., factory.

Musk was speaking at the Tesla’s shareholder meeting, and he also updated investors about the timing of some of Tesla’s new vehicles and about the “constant struggle” to get enough chips and other auto parts.

Musk reiterated expectations that production of the Tesla Cybertruck, an all-electric pickup, will start next year and hit volume production by 2023.

Tesla’s commercial truck, the Semi, and the redesigned Roadster, a luxury sports car, also are expected in 2023, he said. Tesla and other companies are likely to be through the supply-chain shortages by 2023, Musk said.

Tesla stock has gained 23% so far this year, compared with gains of around 21% for the S&P 500 index
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