Tesla (TSLA) has reported its production and delivery numbers for the first quarter of 2022. The company releases its production numbers quarterly whereas Chinese EV (electric vehicle) companies like NIO, Li Auto, and Xpeng Motors release their delivery data monthly.
While the global automotive industry has been battling with supply chain issues, it has been largely business as usual for Tesla and it has been reporting record deliveries.
Tesla’s deliveries hit another record
TSLA produced 305,407 electric cars in the first quarter of 2022. Its deliveries were slightly higher than that and the Elon Musk run company delivered a total of 310,048 cars in the quarter. The company said that it managed to increase its production “despite ongoing supply chain challenges and factory shutdowns.”
Looking at the delivery report, Tesla delivered 295,324 Model 3/Y in the quarter which was over 95% of its total deliveries in the quarter with the higher-priced Model X/S making up for the rest.
TSLA 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.
How do deliveries compare to previous periods?
Tesla had delivered only 184,800 cars in the first quarter of 2021 and 308,600 cars in the fourth quarter of 2021. It was the first quarter when the company’s quarterly deliveries surpassed 300,000.
In 2021, TSLA delivered 936,172 cars which was 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.
Looking at the strong start to the year, Tesla looks set to make another delivery record in 2022.
Tesla deliveries versus analysts’ estimates
Tesla’s deliveries were just about in line with the 310,000 that analysts were expecting. Notably, analysts had downwardly revised the company’s delivery estimates after the shutdown of its Shanghai factory. China has a strict COVID-19 policy and shuts down the entire city to prevent the spread of the virus.
Meanwhile, over the last few quarters, Tesla’s delivery reports have shattered estimates. In the first quarter, the deliveries were just about in line. It would be interesting to see how the markets react to the news when the US stock markets open on Monday.
Tesla delayed the deliveries of new vehicles
While Tesla’s earnings were better than expected in the fourth quarter of 2021, the stock saw a selling spree as it delayed the launch of new vehicles including the long-awaited Cybertruck to 2023. Amid the crippling chip shortage, TSLA is prioritizing the production of existing models.
Other EV companies have also been hit by the chip shortage. Legacy automakers, whose volumes are way above that of EV companies have been even badly hit and the global automotive industry lost billions of dollars in sales last year. Just when things were looking better for 2022, the Russia-Ukraine war and the spread of the coronavirus have negatively impacted market sentiments.
Also, automakers are battling inflationary pressures as prices for key raw materials have spiked. Some of the cost-push inflation is being driven by the Russia-Ukraine war. Automakers including Tesla have been rising prices to dent the impact of higher input costs.
EV startup Rivian also announced a price hike. It said, “Like most manufacturers, Rivian is being confronted with inflationary pressure, increasing component costs, and unprecedented supply-chain shortages and delays for parts, including semiconductor chips.” It added, “This rise in cost and complexity due to these challenging circumstances necessitate an increase to the prices of the R1T and R1S models we offer today, prices which were originally set in 2018.”
Among Chinese EV companies, while Xpeng Motors has announced a price hike, NIO has said that it won’t increase car prices for now. However, given the inflationary pressures, the company might need to take a relook at its policy soon.
Wall Street is divided about Tesla
Wall Street has always been divided on TSLA, including whether it is an automotive company, tech company, or renewable energy company. Morgan Stanley, which is among TSLA bulls believes it is a combination. “So where does Tesla fit in? We’re not going to tell you that Tesla is a car company. Or a tech company. It’s both. But it’s also an energy company. And what we’re seeing emerge over the course of this year is Tesla as a renewable energy on-shore infrastructure company,” it said in its note.
However, Bernstein reiterated its underperform rating on the stock. It said, “Yes, innovation can allow leaders such as Tesla to take price – but only for so long. Ultimately, over time, key innovative features are replicated across all competitors at lower and lower price points.”
Tesla long-term forecast
Meanwhile, while some may scoff at Tesla’s valuation, which is above all the other leading automakers’ combined valuations, some analysts see the stock running much higher in the long term.
Gene Munster of Loup Ventures expects Tesla’s market capitalization to rise to $2 trillion by 2023. Munster had correctly predicted Apple’s market capitalization reaching $2 billion. However, he sees Apple’s entry into the EV industry as a big risk for Tesla. Given its fan following and strong brand and history of coming up with premium products that buyers love, Apple could be the biggest challenge that Tesla investors should watch out for.
Cathie Wood of ARK Invest expects Tesla stock to rise to $3,000 by 2025. Wood has been a long-time Tesla bull and ARK holds the stock in several ETFs including the flagship ARK Innovation ETF (ARKK) where the Elon Musk run company is the top holding. She has however said that she would sell the stock if it were to hit her target price before 2025. Wood frequently sells TSLA shares but that’s more of a portfolio rebalancing activity than her view of the stock.
With a cult-like following for Musk and an attractive product proposition from Tesla, it is tough for any automaker to match the package. You can buy Tesla stock through any of the reputed online stockbrokers. Alternatively, if you wish to trade derivatives, we also have reviewed a list of derivative brokers you can consider.