Tesla (TSLA) outperformed EV (electric vehicle) stocks by a wide margin in 2021. The stock is looking to start 2022 on a high after its fourth-quarter delivery report showing that the company delivered 308,600 cars in the fourth quarter.
It was a new quarterly record for the company and the first time that its quarterly deliveries were above 300,000, which gives us an annual run rate of 1.2 million cars. The deliveries were also way ahead of the around 263,000 deliveries that analysts were expecting.
The breakup of Tesla’s Q4 deliveries
Like in the previous quarters, the mass market Model3/Y accounted for the bulk of the company’s production and deliveries. In the fourth quarter, Tesla delivered 296,850 Model3/Y while the remaining 11,750 were Model S/X. Tesla does not provide an individual breakup of these models. Meanwhile, Tesla has managed to achieve scale with the lower-priced Model 3/Y. In 2021, the company revamped the Model S and launched the upgraded version called Model S Plaid. However, it decided against launching the Plaid+ model which would have had an even higher range. Tesla’s CEO and the world’s richest person Elon Musk believed that the Plaid model was good enough.
2021 deliveries hit a record
In 2021, Tesla delivered 936,172 cars which were 87% higher than the previous year. The company did not provide hard guidance for 2021, unlike 2020 when it had forecasted deliveries of 500,000. However, it had said that it expects deliveries to rise at a CAGR of 50% for some years. For 2021, it had said that deliveries should be much higher than the long-term forecast.
Tesla is coming up with two new plants
Notably, TSLA is working on two new plants, one each in Belin and Texas. It is not known whether the sales bump in the fourth quarter came from incremental deliveries from these plants. What’s encouraging, however, is that Tesla’s sales and deliveries have continued to spike even as automakers have been struggling to secure supplies of key raw materials especially chips. While Musk had previously talked about the chip supply situation, and the company also delayed the launch of its Cybertruck amid the global supply chain issues, they don’t seem to be impacting the company’s production plans.
Gene Munster expects Tesla to deliver 1.3 million cars in 2022
Gene Munster of Loup Ventures, who is bullish on TSLA stock and expects its market cap to rise to $2 trillion, expects that the company would deliver 1.3 million cars in 2022. That would be below the 50% sales growth that Tesla had forecast. Meanwhile, we’ll get more updates on Tesla’s delivery guidance later this month when the company releases its fourth-quarter financial performance.
Wall Street has been mixed on Tesla
Wall Street analysts have always been mixed on the Elon Musk-run company. Last month, Credit Suisse maintained its neutral rating on the stock even as it said that the company’s demand outlook looked strong.
Credit Suisse, which has a neutral rating on TSLA stock said “We believe a central theme for Tesla in 2022 will be its supply/demand mismatch – simply, whatever Tesla can produce, it will sell. Sell-side consensus is currently 1.3mn units, however in recent weeks buyside feedback has cited potential for 1.4-1.6mn units, a clear increase vs. the ~920k we expect from Tesla in 2021.”
It added, “Shanghai could be a source of upside, as it has been largely responsible for Tesla’s positive production trends over the past two years amid a very efficient production ramp.”
2021 was another good year for Tesla
2021 was a spectacular year for TSLA stock and its market cap surpassed $1 trillion. While bears would scoff at an automaker commanding a $1 trillion market cap, Cathie Wood of ARK Invest expects its market cap to rise to as high as $3 trillion by 2025. While her flagship ARK Innovation ETF underperformed the markets badly in 2021, Tesla was a savior. If not for Tesla, the ETF would have performed even badly in 2021.
Tesla and controversies generally go hand in hand. Even if we ignore the frequent controversies that Musk gets himself into, Tesla had yet another controversial year. The company announced a $1.5 billion investment in bitcoins in the first quarter of 2021 and also started to accept it as payment. However, soon Musk had a breakup with the most popular cryptocurrency over its green credentials and the company stopped accepting bitcoins. Musk’s tweets and antics had a market-moving impact and the self-proclaimed “dogefather” influenced the price action of several cryptocurrencies. Many have been critical of Musk for triggering a crash in cryptos.
It announced a massive recall of vehicles in the US as well as China. There was also a fire incident with vehicles including the Model S Plaid. Then the company got into controversies for its FSD (sull-self driving). The nomenclature sounds misleading as the software is not yet fully autonomous and even Tesla advises riders to keep their hands on the steering all the time. The NHTSA opened a formal investigation into the Autopilot after reports of crashes. The regulator is also investigating whether drivers can play a videogame on the touchscreen in Tesla cars.
Now, the company has recalled almost half a million cars in the US. Recalls are not uncommon for automakers and Dan Ives of Wedbush Securities, who is among the most prominent Tesla bulls, does not see the recall as a worry. Notably, despite other automakers ramping up their EV plans, Tesla enjoys a 70% market share in the US EV market.
However, it was dislodged from the position in Europe by German automaker Volkswagen. Europe has been a battleground for EV companies and leading Chinese EV companies like NIO and Xpeng Motors are targeting the continent before an eventual entry into the US.
What to expect from Tesla in 2022?
Tesla stock looks set to begin 2022 on a positive note. That said, expect another volatile year from Tesla as the company tries to justify its $1 trillion market cap. This year, the company would also face increased competition from newly listed Rivian and Lucid Motors. The Chinese EV markets could see even more competition as Huawei is also coming up with its electric car towards the end of February. NIO’s two sedans would also debut this year.