Interactive Investor

ii view: Tesla deliveries rise

4th April 2022 12:00

Keith Bowman from interactive investor

Challenges persist, but this electric vehicle maker continues to steer a steady course. We assess prospects. 

First-quarter production and deliveries

  • Deliveries up 68% on Q1 2021 to 310,048 vehicles  
  • Production up 69% on Q1 2021 to 305,407 vehicles

ii round-up:

Electric vehicle maker Tesla (NASDAQ:TSLA) delivered more cars in the first quarter of 2022 than in the final quarter of 2021 despite ongoing challenges.

Deliveries, the closest number Tesla offers to sales, rose to 310,048 in the three months to the end of March, up from 308,600 during the fourth quarter of 2021. Production dipped slightly to 305,407 compared to the prior quarter’s 305,840 vehicles. 

Tesla shares prior to this latest update were trading around 2% higher for the year-to-date, having previously been down by more than 10% during 2022. Shares for European rival Volkswagen (XETRA:VOW) remain down around 11% year-to-date, while shares for US rival Ford (NYSE:F) are down by close to 20%.

The auto industry as a whole has been battling a combination of supply chain difficulties coming out of the pandemic, particularly for semiconductor chips, along with continued pandemic-related disruption in China. Prices for raw materials such as aluminium and nickel have also increased following the war in Ukraine. 

Tesla production during the quarter was hindered by temporary halts at its Shanghai plant due to new pandemic restrictions applied by the government. 

More favourably, Tesla has only recently opened its new factory in Brandenburg, Germany. The official opening of its new Austin, Texas plant is also due in early April. 

Tesla is considering another share split following a vote at its pending annual shareholder meeting. First-quarter 2022 results are scheduled for 20 April. 

ii view:

Founded in 2003, today the Elon Musk-headed company makes both electric vehicles and energy generation and storage systems. It has a stock market value of more than $1 trillion dollars compared to rivals Ford and General Motors (NYSE:GM) at under $70 billion. 

For investors, climate change and a US government with green aspirations provide a positive backdrop. Robust customer demand, new production plants and potential to expand into markets such as India also warrant consideration. As do other ventures including its development of autopilot and full self-driving capabilities, along with the existing energy generation and storage business. 

On the downside, pandemic halts to production in China are now being faced, while raw material costs and business costs more generally are rising. A more than 1,000% increase in the Tesla share price since pandemic-induced market lows in March 2020 is also worth pondering. As is an estimated price to Net Asset Value (NAV) of over 35 times compared to estimates at under two times for rivals such as VW, Ford and General Motors, suggesting the valuation is far from cheap. For now, and despite progress, the shares are arguably up with events. 

Positives: 

  • Clear customer demand
  • Climate change concerns are growing globally

Negatives:

  • Competition from other manufacturers is increasing
  • Persisting valuation concerns

The average rating of stock market analysts:

Strong hold.

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