Why is the Tesla share price cruising today?

Posted: 27 January 2022 12:57 pm
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Shares in the electric car maker climbed almost 40% in the last 6 months.

Shares in electric car giant Tesla Inc. (NASDAQ: TSLA) have cruised more than 2% to US$937.41 in Wall Street trading. Even with recent losses, the stock is still up nearly 40% over the last 6 months.

What is boosting the Tesla stock price?

The latest gains in Tesla shares came after the company posted record annual earnings.

The electric vehicle maker reported an annual profit of US$5.5 billion on sales of US$53.8 billion in 2021. That compared to a US$721 million in profit and US$31.5 billion in sales in 2020, when Tesla generated its first full-year profit.

Tesla delivered more than 936,000 vehicles globally last year, an 87% improvement from 2020, even though global computer-chip shortages limited vehicle production across the auto industry.

This included a record 308,000 vehicles in the final 3 months of 2021, a figure that far exceeded analyst estimates.

Tesla has navigated the supply crunch by making design changes that allow its software to use chips that are more easily available. And like other automakers, it has benefited after sharply raising US vehicle prices as demand exceeded supply.

Subdued outlook

Despite being able to weather the supply chain crisis, Tesla warned that the headwinds would continue through this year and limit electric vehicle production. That would still result in annual deliveries growing more than 50% in 2022.

“Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022,” the company said in a statement.

​​It also flagged that rising raw-materials prices and higher logistics costs dented profit, as did increased costs related to vehicle recalls.

Tesla also has the additional challenge of opening 2 new factories this year with chips and other parts in short supply and new batteries and technologies to be introduced.

Meanwhile, CEO Elon Musk said the EV maker would not introduce new models this year, but hopefully would launch its Cybertruck, Semi and Roadster next year.

That could dampen enthusiasm among investors, given that it has been nearly 2 years since the company last delivered a new model, the Model Y compact sport-utility vehicle, to customers.

Tesla crossed market capitalisation of over $1 trillion in the last quarter of 2021 but the company's shares have lost ground in the last 2 months after Musk sold part of his stake in the electric car maker.

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