Tesla Weaker on Fear Chip Crunch May Knock on its Door Too
By Dhirendra Tripathi
Investing.com – Tesla stock (NASDAQ:TSLA) traded 1% lower in Thursday’s premarket after the company spoke of a “variety of challenges” while disclosing third-quarter results that surpassed expectations.
The company referred to “semiconductor shortages, congestion at ports and rolling blackouts” even though its numbers suggested it had mastered those issues relatively well.
Tesla is among the most vertically integrated carmakers and that has allowed it to be on top of the supply chain issues plaguing most of the manufacturers. But such talk from the management was enough to sow doubt about whether that can be sustained.
Price fluctuations of raw materials such as nickel and aluminum had created an “uncertain environment with respect to cost structure”, Chief Financial Officer Zachary Kirkhorn was quoted by Reuters as saying on a call with analysts.
“Q4 production will depend heavily on availability of parts, but we are driving for continued growth,” he said. Celebrity CEO Elon Musk didn’t participate in the analyst briefing.
Supply chain issues have crippled just about every company as economies have boomed while supplies have lagged owing to the pandemic-induced restrictions keeping factories shut. Those shortages have been particularly acute for carmakers, who have had to compete with phone- and gadget-makers for the same capacities at chips-making factories.
Tesla’s gradual shift to lower-margin vehicles also weighed on sentiment, although cost discipline ensured that the carmaker’s operating margins reached an all-time high.
Average sale price of vehicle declined by 6% on the year as the weight of the Model 3 in the sales mix grew.
The EV-maker produced 64% more vehicles at 237,823 units and delivered 73% more at 241,391 units, with the lower-cost Shanghai factory beating the Fremont plant in quantity produced.
Automotive revenue jumped 58% to $12.05 billion while total revenue rose 57% to a record $13.75 billion. The company’s revenue from sales of environmental credits continued to fall as more companies shift to cleaner energy and reduce their dependence on buying carbon credits from Tesla. Revenue from sale of these credits fell 30% to $279 million.
The company posted a third consecutive record quarterly profit of $2.09 billion on an adjusted basis,up almost 140% from a year ago.
Tesla is now focusing on starting production at two new factories, one in Austin, Texas, and another outside Berlin, by the end of the year.
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