Why is the Tesla share price racing away?

Posted: 4 January 2022 12:10 pm

Shares in the electric car maker climbed more than 50% in 2021 and have started the new year with a bang.

Shares in electric car giant Tesla Inc. (NASDAQ: TSLA) have surged more than 13% to US$1,199.78 in Wall Street’s first trading day of the new year, its biggest daily rise in months. This comes after a stunning over 50% surge in the stock over 2021.

What has pushed up the Tesla stock price?

The latest jump in Tesla shares comes just a day after the company announced record fourth-quarter deliveries. CEO Elon Musk tweeted the results on Sunday, which showed Tesla delivered more than 308,000 vehicles in the final 3 months of 2021.

The figure far exceeded analyst estimates, and marked the company’s best quarterly delivery rate to date, bringing full-year deliveries to more than 936,000 vehicles.

Tesla's October-December deliveries were up about 70% from a year ago and about 30% higher from the September quarter, which had also seen a record.

The numbers look even more impressive because they come at a time of worldwide shortages of vital auto components such as semiconductors. Tesla has navigated the crunch in part by making design changes that allow its software to use chips that are more easily available.

The strong sales came even after Tesla sharply raised US vehicle prices to offset higher supply chain costs.

Strong outlook

The record numbers have left investors betting on an even better performance for 2022.

Tesla, which recently relocated its headquarters to Texas, is set to start production at its new factory in Austin this year. A separate factory in Brandenburg, Germany, is also expected to start production in 2022.

It has already ramped up production in China, from where it currently ships vehicles to Europe and some Asian countries.

Deutsche Bank last week forecast Tesla could make nearly 1.5 million vehicle deliveries in the new year. After Sunday’s announcement, Deutsche Bank analysts said the “impressive” deliveries data suggests “large upside to 2022'' and raised their price target on Tesla shares to US$1,200 from US$1,000.

So far, at least 8 of the 41 analysts have raised their targets on the Tesla stock after the deliveries data.

Tesla crossed market capitalisation of over $1 trillion in October although the company's shares lost some ground in the last 2 months after Musk flagged selling 10% of his stake in the electric car maker.

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