Tesla expects to choose new factory location in 2022
Updated
Tesla will scout new factory locations throughout 2022 and expects to have a new site chosen by the end of the year, company founder and CEO Elon Musk said on Wednesday.
Musk made the comments during the company’s fourth-quarter 2021 earnings call with analysts and shareholders. The hunt for a new location comes after a year in which the world’s largest EV maker grappled with microchip shortages and other supply-chain challenges.
A new manufacturing plant would be Tesla's fifth, after Fremont, California; Austin, Texas; Berlin, Germany; and Shanghai, China.
Tesla is sticking with a target of 50% annual EV production increases in coming years, but Musk indicated that the company could surpass that level this year.
However, he dismissed the idea of producing a previously discussed $25,000 sedan this year, which would be well below current Tesla prices.
Not making $25,000 car
“We're not currently working on a $25,000 car,” Musk said on the call. “We have too much on our plate.”
But Musk confirmed that Tesla has started building “quite a few cars” at its new plants in Austin and Berlin. The company will also deliver vehicles containing its highly-anticipated new 4680 battery in the first quarter, after the device is certified, he added.
Wedbush analyst Daniel Ives said the fact that the company is maintaining its annual growth target of 50,000 vehicles produced rather than increasing it was not surprising given that supply-chain issues have become a limiting factor for Tesla and all other automaker and will likely continue in 2022.
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Supply chain woes
“To put this in context we believe this quarter's deliveries would have been roughly 10%-12% higher if not for the lingering supply chain/logistics issues globally,” wrote Ives in a research report that he provided to Capital.com. “Importantly, Tesla confirmed builds of Model Y started in late 2021 at Giga Austin in line with our thoughts, with deliveries to customers starting once final certification is achieved.”
Tesla is in the process of officially opening its new plants in Austin and Berlin. Ives believes that the company will double production to two million units by year-end 2022 from about one million.
Tesla previously announced that it delivered 308,000 EVs in the fourth quarter of 2021 with Model 3 and Y sedans accounting for 296,000 and Model S and X SUVs representing a modest 12,000. According to Ives, sedan output beat Wall Street’s estimate of 265,000 but SUV production slightly missed analysts’ forecast of 13,000.
Trajectory looks robust
“Taking a step back, with the chip shortage still a major overhang on the auto space and logistical issues globally, these delivery numbers combined with this impressive earnings beat (speak) to an EV demand trajectory that looks quite robust for Tesla heading into 2022,” Ives wrote.
Tesla grew revenue 65% in the third quarter to $17.71bn. Annual revenue of $53.82bn beat the estimate of $52.5bn from analysts polled by Refinitiv. Quarterly adjusted earnings per share of $2.54 exceeded analysts’ projected $2.31.
Testla’s stock rose more than 5% in after-hours trading, before receding sharply, after closing up 2.07% at $937.41.
“We aim to increase our production as quickly as we can, not only through ramping production at new factories in Austin and Berlin, but also by maximising output from our established factories in (California) and Shanghai,” Tesla reported in a letter to shareholders. “We believe competitiveness in the EV market will be determined by the ability to add capacity across the supply chain and ramp production.”
Musk returned to the earnings call after previously vowing that he would not attend any more calls. He had hinted of a return recently after missing the third-quarter 2021 call.
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