Share decline tied Tesla chips, battery issues
Tesla’s shares fell as the global chip shortage cast doubt on its sales targets for 2021, damping investor enthusiasm after the electricvehicle maker had its first $1 billion quarter of net income.
Even with second-quarter profit and sales exceeding estimates, it was Chief Executive Officer Elon Musk’s cautionary hints from Monday evening’s call with investors that held sway with investors Tuesday. He highlighted the unpredictabiltiy of chip supplies and the hurdles he expects in ramping production at two new factories in Austin and Berlin later this year.
Tesla fell as much as 4.2%, the biggest intraday decline since June 3, and closed at $644.79, down 2% in New York.
“While we’re making cars at full speed, the global chip shortage situation remains quite serious,” Musk said. “For the rest of this year, our growth rate will be determined by the slowest part in our supply chain.”
Musk said Tesla has had factory shutdowns due to parts shortages even as its engineers rewrote software to adapt to whatever chips they could find. The company confirmed a forecast for 50% annual growth in deliveries over multiple years and reiterated that this may be one of the years it expands by more than that.
“Guidance for this year and comments about next continue to be vague,” Cowen analyst Jeffrey Osborne wrote in a note Monday after the earnings release. “The company continues to target over 50% delivery growth; however, consensus assumes over 70% growth.”
Tesla sold just under 500,000 vehicles in 2020, and a record 201,250 cars in the second quarter. Profit for the three months ended June 30 more than tripled to $1.45 a share on an adjusted basis, beating the 97-cent average of analysts’ estimates and marking the eighth straight quarter of profit.
Musk declined to give a firm timeline for when Tesla’s new, larger 4680 battery cells, which it’s trying to make in-house, will be ready. The automaker plans to use them in both the Semi truck and the Model Y built in Austin, but has a backup plan to use 2170 cells if it can’t be achieved in time, Musk indicated on the call.