Interactive Investor

ii view: Tesla deliveries rise but disappoint Wall Street

3rd January 2023 11:44

Keith Bowman from interactive investor

Shares in this high-profile electric car maker suffered a dreadful 2022. We take a look at prospects. 

Fourth-quarter update to 31 December 2022

  • Deliveries of 405,278 vehicles, up from 343,830 in the previous quarter
  • Total production of 439,701 vehicles, up from 365,923 in the previous quarter

ii round-up:

Electric vehicle (EV) maker Tesla Inc (NASDAQ:TSLA) detailed quarterly deliveries comfortably above the previous quarter but below Wall Street estimates. 

Fourth-quarter deliveries to the end of December, the nearest number Tesla offers to sales, came in at 405,278 vehicles, up from 343,830 in the prior third quarter, although that is shy of analyst forecasts for nearer to 427,000.

Tesla’s share price has fallen by just over two-thirds during the last year as competition from rivals has grown and prospects for the economic outlook have deteriorated. EV rivals Volkswagen AG (XETRA:VOW) and Ford Motor Co (NYSE:F) are down by around a third and one half respectively during that time while the S&P 500 index has fallen by a fifth. 

Tesla deliveries for the full year rose 40% to 1.31 million as production increased to 1.37 million from 930,422 vehicles in 2021. The Elon Musk run company started production at new plants in both Germany and Texas USA during the year, along with an increase in output at existing factories in California and Shanghai, China. 

Fourth-quarter production totalled 439,701 vehicles, up from 365,923 in the previous quarter and compared to 305,840 in the final quarter of 2021. 

Tesla’s fourth-quarter and full year 2022 results are scheduled to be announced on 25 January. 

ii view:

Founded in 2003, Tesla now makes both electric vehicles and energy generation and storage systems. Employing around 100,000 people and a constituent of the Nasdaq 100 index, it has a stock market value of over $380 billion compared to Mercedes-Benz Group AG (XETRA:MBG) and General Motors Co (NYSE:GM) both at under $100 billion. 

For investors, increasing all-electric and hybrid vehicle competition from rivals, often at lower prices, cannot be ignored. Rising interest rates may deter potential buyers using finance, costs remain elevated, while Tesla's Chinese production plant remains affected by the country’s journey through the pandemic. There are also concerns that Elon Musk’s involvement in Twitter may be a distraction, while Tesla's valuation still raises questions - an estimated price-to-net asset value of over 10 times contrasts with estimates at under two times for most rivals. 

More favourably, both production and deliveries have grown year-over-year, and a more even global distribution of production plants, including one now in Europe, should help reduce transport costs. Moves to install a new person to run Twitter for Musk may reduce distractions, while hopes to eventually begin selling its cyber pickup truck and even possibly a driverless or robotaxi offer future growth potential.

On balance, and despite some caution remaining sensible, long-term fans of this iconic car maker are likely to remain patient. 

Positives: 

  • Increasing production
  • Climate change concerns are growing globally

Negatives:

  • Rising competition from other manufacturers
  • Persisting valuation concerns

The average rating of stock market analysts:

Strong hold

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