Tesla (TSLA Stock) share price hits speed bump

The Tesla share price has been under pressure for most of this month, having fallen below its $1trn in market cap it has struggled to rally from the three month lows we saw earlier this week.

Last night’s Q4 numbers built on the decent numbers seen in Q3. The company posted a record annual profit of $5.5bn but warned that supply chain problems were likely to be a headwind moving into 2022, and which is likely to see the shares slide back when US markets open later today.

Q4 profits came in at $2.54c a share, on revenues of $17.72bn, beating expectations on both.

Automotive margins remained steady, coming in at 30.6%, with the company delivering 308,600 cars, during the quarter, most of which were Model 3 and Model Y, accounting for almost 297k.

The supply chain constraints have meant that existing plants aren’t operating at full capacity and are likely to continue to do so for the foreseeable future. The carmaker says it is still intent on seeing an annual growth rate for vehicle deliveries of 50%.

On an annual basis Tesla produced a total of 936,172 vehicles in 2021, with the hope that 2022 will push that total strongly above the 1m mark, to over 1.3m.

The company plans to open its new plant in Austin Texas, in order to build many more Model Y cars, while the plant in Germany is also expected to open later this year. Both are still in “equipment test” phase” which suggests they still remain some way from being full production ready, and that is a concern if they are able to deliver on their growth targets.

On the Cybertruck project, production here appears to have been pushed back into 2023, with Tesla saying that no new models will be produced this year, and that the focus will remain on its current range of vehicles.

With competition in this sector set to become much more intense over the next few years, with the arrival of new competition in the form of Rivian, as well as having to cope with the likes of Ford, GM and Volkswagen looking to ramp up their electric vehicle offerings, Tesla will have to work much harder to maintain its rich valuation even if it continues to generate the record profits that it has been doing.  

Let's not forget Tesla is still worth more than the likes of Volkswagen, Toyota and Ford combined, and still doesn't sell anywhere near as many cars.