Tesla’s fourth quarter is a perfect illustration of the market looking forwards, not back.

Shares in the electric vehicle maker drifted lower in after-hours trading after the company warned that supply chain trouble would negatively impact performance in 2022.

Supply chain issues are a blow because investors have long been waiting to reap the benefits of the group’s operating leverage which should cause profits to rise faster than revenue.

That disappointment followed an 8.5% share price rally in New York on Wednesday before the after-close announcement.

Tesla shares are expected to open about 1.2% down when the US market opens later today, implying a $925 share price, having been caught up in the global growth stock sell-off since the New Year.

Tesla has lost nearly 19% since the start of 2022.

MANAGING CHIP SHORTAGES

Tesla has so far been pretty good at avoiding chip shortages and other supply problems.

Q4 net profit rose to a record $2.3 billion with operating profit jumping from $575 million to $2.6 billion year-on-year, reflecting higher deliveries with lower per-vehicles costs as well as improved profitability in leasing and services, offsetting a 50% rise in operating costs to $2.2 billion as the company builds the new factories.

Overall, Tesla beat Wall Street forecasts for sales and profits in the quarter and boss Elon Musk predicted forecast electric vehicle deliveries would grow well above 50% in 2022. Earnings were $2.54 per share versus $2.25 expected by the market.

Tesla also ended 2021 with $10.9 billion of cash, with free cash flow of $2.8billion during the quarter compared to $1.9 billion a year ago.

VEHICLE PRODUCTION RISING FAST

Having revealed earlier this month that annual vehicle deliveries surged 87% to more than 936,000 for 2021, Elon Musk said the production run rate at the end of the year was more than 1.2million from the two gigafactories in California and Shanghai currently up and running.

Giga Austin, in Texas, is likely to be next to come fully onstream having already started building Model Y vehicles last year. There was still no definitive start date for a fourth, Giga Berlin, as it awaits final permitting.

Musk also ruled out introducing new vehicle lines this year, which would impact total vehicle output, he said on a call with analysts. Investors might rad that as confirmation that launch of the Cybertruck has been delayed. Intriguingly,

Musk also said he’d be surprised if Tesla didn’t achieve fully self-driving proven to be safer than having a human behind the wheel this year, although we shall see.

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Issue Date: 27 Jan 2022