Last week, Tesla released its second-quarter delivery report. While Chinese EV (electric vehicle) companies release their deliveries on a monthly basis, Tesla does so quarterly.
The mood was quite somber heading into Tesla’s second-quarter delivery report. Wall Street analysts had slashed the company’s delivery guidance before the actual release. The company’s CEO and the world’s richest person Elon Musk had himself warned of a “tough” quarter in an internal email.
The fears came true when Tesla released its delivery report. The company produced 258,580 cars in the quarter and delivered 254,695. Since the first half of 2020, when COVID-19 lockdowns in China and the US, led to cutbacks in Tesla’s production, the company has been delivering a record number of cars every quarter. The second quarter of 2022 was the first time in two years when Tesla’s production fell on a quarterly basis.
Looking at the breakdown of sales, Tesla produced 241,169 Model 3/Y cars in the quarter while the remaining were Model S/X. The percentage of lower-priced Model 3/Y cars in the company’s total sales mix has risen over the last three years.
Tesla has achieved scale with these two models. Last year, the company revamped the Model S and came up with the “Plaid” version with a higher range. It was also contemplating offering Plaid+ which could have an even higher range and have competed with Lucid Motors’ Air. However, Musk decided against the Plaid+ version.
NIO Reported a Rise in Deliveries in June
Meanwhile, as the lockdowns were lifted in China, Tesla said that June was its best production month on record. Chinese EV makers also reported a spike in June deliveries and NIO delivered a record 12,961 cars in the month. However, the company was outsold by both Xpeng Motors and Li Auto. Xpeng Motors’ cumulative deliveries are now approaching that of NIO after outselling it over the last few months.
Notably, the chip shortage situation has taken a toll on global automotive production. While Tesla still produced a record number of cars in 2021, it had to delay the launch of Cybertruck to 2023 due to the chip shortage situation. The automotive industry continues to be impacted by chip shortage and General Motors said that it could not ship thousands of cars to dealers in the second quarter due to chip shortage.
Smartphone and PC companies were also hit by chip shortages. However, Micron now expects global smartphone and PC shipments to fall in 2022. The chipmaker expects companies to clear their inventory in the coming months. The bleak commentary led to a crash in chipmakers’ stock.
Tesla Facing a Recall in Germany
Germany’s road traffic agency has issued a recall of 59,000 Tesla cars due to issues with the automatic emergency call system. The Elon Musk-run company has had trouble with US regulators also and the NHTSA in the US has been investigating its Autopilot crashes. Musk has had his run with the SEC also even since his infamous tweet of taking Tesla private. As part of the settlement with the SEC, Musk quit as Tesla’s chairman and also paid millions of dollars in fines. He was also supposed to show restraint in future tweets but the billionaire, who has offered to buy Twitter, hasn’t complied much.
Tesla would release its second-quarter earnings later this month. Musk has noted that the new plants in Berlin and Austin and losing tons of money, which is not uncommon for automotive plants which are ramping up production.
While Tesla had a poor profitability record in the initial years, it has posted a profit in every quarter since Q3 2019. The company even posted profits in the first half of 2020 while the global automotive industry lost billions of dollars.
Tesla recently announced a price hike across all the models in the US. These price hikes would help the company improve its margins at a time when new plants are expected to drag earnings.
Goldman Sachs reiterated Tesla Stock as a Buy
Last week, Goldman Sachs reiterated Tesla stock as a buy. The brokerage is particularly bullish on the company’s network of Superchargers and believes that over the long term, the company would open up the charging network to other electric cars also which would help monetize the assets. While rivals like Lucid Motors have partnered with third parties for charging network, Tesla has built its own network.
Tesla stock has lost over 35% this year amid the sell-off in growth names. However, bulls like Cathie Wood, Gene Munster, and Adam Jonas expect the stock to run much higher in the long term. US markets are closed today on account of the Independence Day holiday.
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