Tesla Q1 Deliveries Climb To A Record As EV Maker Weathers Challenges; Model 3/Y Sales Show Weakness

Zinger Key Points
  • Tesla's record sales performance came despite factory shutdowns that threatened production.
  • Tesla's Shanghai plant is currently on an extended shutdown due to a lack of manpower.

Tesla, Inc. TSLA reported strong deliveries for the first quarter, defying the engulfing macroeconomic and geopolitical risks.

What Happened: Tesla said it delivered a record 310,048 cars in the first quarter compared to the consensus of 312,000, according to Wedbush analyst Daniel Ives. Some optimistic estimates had called for deliveries of about 319,000.

The first-quarter tally represented a modest 0.5% increase from the fourth-quarter deliveries of 308,600 but a 68% jump from the year-ago quarter's 184,800 units.

Tesla sold 295,324 Model 3 and Model Y vehicles, down from 296,850 units sold in the fourth quarter. Model S/X sales increased from 11,750 units in the previous quarter to 14,724 units.

On the production front, the company rolled off 305,407 units, comprising 14,218 Model S/X cars and 291,189 Model 3/Y vehicles.

"In the first quarter, we produced over 305,000 vehicles and delivered over 310,000 vehicles, despite ongoing supply chain challenges and factory shutdowns," the company said in a statement.

Related Link: As New Two Gigas Come Online, Here's A Look At How Much $1,000 Invested In Tesla At Giga Shanghai's Opening Is Worth Today

Why It's Important: Tesla's record sales performance came despite factory shutdowns that threatened production. The company had to shut down its Giga Shanghai plant on more than one occasion due to the lockdown restrictions put in place in response to renewed outbreaks of COVID-19 in some parts of China.

The Shanghai plant is currently on an extended shutdown due to a lack of manpower, according to reports that cited an internal communication from the company.

Tesla's China plant has an annual production capacity of close to half a million and was thus far supplying Model Y SUVs to Europe, while also catering to domestic demand.

Additionally, the company had to take on supply side challenges. The Russia-Ukraine crisis has sent prices of battery materials soaring. Components were also in short supply.

In response to the input cost inflation, Tesla raised prices of its vehicles, globally, multiple times in the year-to-date period.

General Motors Corporation GM and Ford Motor Company F announced last week they are idling production at their Michigan plants due to component shortages.

What's Next: Tesla executives said on the fourth-quarter earnings call the company is well positioned to meet the delivery growth target of over 50% in 2022. More capacity is coming online, with the openings of Giga Texas and Giga Berlin. Given the long-term contracts in place for securing raw materials and its vertical integration, the company could fare better than its competitors in this supply-constrained environment.

Tesla is scheduled to announce its first-quarter results on April 20. More details on how the company is handling the crises could be shared by management on the earnings call.

Skeptics might highlight the miss relative to some estimates and the sequential decline in Model 3/Y vehicles, two of its best-selling models. All the same, Tesla has to be given credit for the way it has navigated through the challenges and its consistent performance.

Tesla closed Friday's session at $1,084.59, up 0.65%. The stock has gained 2.6% in the year-to-date period and has recovered nicely from the $700 level it touched in late February.

Related Link: EV Week In Review: Tesla Asks Investors 'To Split Or Not To', Nio Kickstarts ET7 Deliveries, Production Disruptions Deepen And More

Photo: Courtesy of tesla.com

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