Tesla braces for busy 2022 with new factories and upcoming Cybertruck, but safety probes could drag its inventory

Tesla Inc. is looking ahead to a busy 2022, when the electric vehicle maker is expected to open new factories and launch its long-awaited electric truck, but some analysts say the dozens of investigations into the safety of its driver assistance functions and its high valuations are reasons to remain cautious on the stock.

The Wall Street consensus calls for a more than 40% increase in profits next year, to $ 8.64 per share, from an estimated $ 5.99 for 2021, according to FactSet. Sales are expected to grow at a similar pace to $ 73.2 billion, from around $ 51.7 billion this year. Tesla is expected to sell nearly 1.5 million vehicles in 2022, against expectations of around 900,000 vehicles for 2021, according to analysts polled by FactSet.

“It will be a stronger year than 2021,” said Bill Selesky, analyst at Argus Research. “Basically it’s all about demand, and Tesla has had fewer issues with (supply chain delays) than GMs and Fords of the world.”

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and many other OEMs, however, will launch new electric vehicles and several electric trucks and SUVs, including GM’s Ford F-150 Lightning and Chevy Silverado, could give Tesla a run for its money.

Tesla unveiled its unconventional-looking electric truck two years ago, long before other automakers went public with plans for electric trucks and SUVs, the type of cars that U.S. buyers have favored for years. . Volume production of the truck would likely come in 2023, Tesla said, which is behind schedule.

“It’s going to be a stronger year than 2021. Basically it’s all about demand, and Tesla has had fewer issues with (supply chain delays) than GMs and Fords of the world.”

– Bill Selesky, Analyst, Argus Research

Chief Executive Elon Musk has announced that he will participate in Tesla’s fourth quarter earnings call with an update on Cybertruck and supply chain delays.

Earlier this year, Musk told Wall Street he was unlikely to appear on Tesla’s future earnings “unless I have something important to say,” and he was not at the call of the third trimester.

Musk, who has been selling Tesla shares for weeks, tweeted in late November that he would provide “an updated product roadmap” during the fourth quarter call, which is expected to take place in late January. He prefaced this by calling 2021 the year of “a supply chain nightmare and it’s not over!” “

Tesla has so far “weathered the chip crisis extremely well,” said Michelle Krebs, analyst at Cox Automotive. “No other competitor has made a dent in Tesla’s sales. But that’s a question for the future,” she said.

The Cybertruck may have been ahead of the rest, but “revealing it doesn’t mean much. You have to run, ”Krebs said. “Tesla has a super strong brand, and they were the first in so many things. They won’t be the first in electric trucks.

The Cybertruck is expected to be built at the factory Tesla is currently building in the Austin, Texas area, which Musk called “massive.”

Tesla, which also moved its headquarters to Texas from California in a move announced in October, plans to turn the 2,000-acre property into an “green paradise” that will be open to the public with walks and trails. The plant will also build Model 3 and Y models for the East Coast and the Tesla long-haul commercial truck.

The Tesla plant in Berlin, Germany is also set to start its production line in earnest in the new year, after numerous delays involving regulatory approvals.

Tesla has been “somewhat limited in production,” Krebs said, and bringing more factories online “will alleviate some of the stress.”

Then there’s the stress caused by the ongoing crash investigations of several safety agencies, some of which were fatal and allegedly involving Autopilot, Tesla’s suite of advanced driver assistance systems.

Tesla has been criticized for what some say amounts to ‘overestimating’ the capabilities of the system and for not doing enough to ensure that drivers are alert and ready to regain control of their vehicles at any time in the event of a failure. of the system.

See also: Opinion: It’s time for Elon Musk to start telling the truth about autonomous driving

It could damage its reputation, although its owner base is “a very enthusiastic bunch of people,” Krebs said.

A return to the bond market?

Bond Angle CEO Vicki Bryan said Tesla is likely to return to the bond market in 2022 as interest rates are still low “and Tesla is going through a lot of money.”

Bryan said there is a risk of additional Tesla vehicle recalls in China and Europe, adding to the pressure from ongoing security investigations in the United States.

“I’m excited about electric vehicles, but not all will be Tesla,” she said.

“Profitability and momentum peaked in the second half of this year. … They’ll be having trouble with comps next year, ”and the second half of 2022 is shaping up to be particularly tough with a lot more choice in the EV market, Bryan said.

Read more: A new Big Three? Rivian and Lucid valuations accelerate ahead of Ford, GM

Tesla’s valuation topped $ 1 trillion in October, but recently surpassed that level and the stock entered a bearish market, its third of the year, defined as a closing loss of at least 20 % from a peak.

Tesla’s valuation is “sustainable,” said Selesky of Argus.

“What we have here is a growing business,” he said. “At the end of the day… Tesla is going to be the market share leader until 2027, they deserve a premium review.”

Despite the slide to a bearish market, Tesla still enjoys outperformance against the broader stock market. The stock is up 36% for the year, against gains of around 24% for the S&P 500 index. SPX,

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