ii view: Tesla deliveries hit new record

Planning a fifth factory and with Twitter now in its marketing armoury. Buy, sell, or hold?

First-quarter production update to 31 March

• Deliveries of 422,875 vehicles, up from 405,278 in the previous quarter
• Total production of 440,808 vehicles, up from 439,701 in the previous quarter

ii round-up:

Electric car maker Tesla Inc (NASDAQ:TSLA) reported record vehicle deliveries for the first three months of 2023, marginally topping Wall Street estimates. 

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Deliveries of 422,875, the nearest figure Tesla offers to sales, rose 36% year-over-year and were up from 405,278 vehicles in the final quarter of 2022. That followed vehicle price cuts which the Elon Musk headed company made in late 2022, sparking a potential price war among the world’s electric vehicle (EV) makers. 

Shares in Nasdaq-listed Tesla currently sit within reach of a four-month high having come into this latest news up 68% year-to-date. Rivals Ford Motor Co (NYSE:F) and General Motors Co (NYSE:GM) are both up by 8% over that time, similar to the broad S&P 500 index.  

Tesla production during the quarter increased to 440,808 from 2022’s first quarter total of 305,407 vehicles, and was marginally up from the prior quarter’s 439,701. 

During 2022, Tesla started production at new plants in both Germany and Texas, along with increasing output at existing factories in California and Shanghai, China. In early March, it announced plans to build another factory in neighbouring Mexico. 

Tesla is targeting vehicle deliveries of 2 million during 2023, a potential increase of 52% compared to 2022. The EV maker’s much-anticipated Cybertruck is also expected to enter production in the latter half of 2023.

First-quarter results are pencilled in for 19 April. 

ii view:

Started in 2003, Tesla today makes both electric vehicles and energy generation and storage systems. As well as increasing its vehicle deliveries by 40% during 2022 to 1.31 million, energy storage products also hit a record 6.5 gigawatt hours during the year, while solar products came in at 348 megawatt hours, their highest since 2017. Employing around 100,000 people, Tesla has a stock market value of over $600 billion compared to both Mercedes-Benz Group AG (XETRA:MBG) and Volkswagen AG (XETRA:VOW) both at under $90 billion. 

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For investors, increasing all-electric and hybrid vehicle competition from rivals cannot be ignored. Elon Musk’s interest in Twitter could now distract him, continuing interest rate hikes may deter some buyers, a recession could also hit demand, while the full environmental impact of battery production still remains open to debate. Tesla’s estimated price to Net Asset Value (NAV) of over 10 times also contrasts with estimates at under two times for many of its rivals, suggesting the shares are not cheap. 

On the upside, production is growing, with revenues hitting a record in the final quarter of 2022. Development of its vehicle software continues, its own network of supercharging stations is being opened up to other vehicle owners and potentially offers opportunity, while Elon Musk believes that Twitter provides an excellent way to market Tesla products.  

On balance, and while some caution looks sensible, ongoing innovation, increasing production and the electric vehicle lead stolen on its traditional rivals, is likely to leave existing fans of the company happy to keep holding. 

Positives: 

• Increasing production
• Climate change concerns are growing globally

Negatives:

• Rising competition from other manufacturers
• Elevated costs

The average rating of stock market analysts:

Strong hold