Tesla comes up short of delivery target on electric cars

The electric-car maker didn’t meet its initial goal of increasing annual deliveries by 50 per cent or more last year amid slow growth.

A number of factors have led to Tesla missing its delivery, growth targets. Picture: Qilai Shen/Bloomberg

Tesla delivered fewer vehicles in 2022 than it initially targeted, capping a year during which the stock suffered its worst annual performance as demand appeared to soften and Covid-related production disruptions persisted.

Elon Musk’s electric-vehicle maker said overnight it delivered about 1.31 million vehicles last year, up roughly 40 per cent from 2021.

The company would have needed to hand over more than 1.4 million vehicles to meet its initial goal of increasing deliveries by 50 per cent or more.

Tesla signalled in October that it likely would come up short of its target, Wall Street had moderated its delivery expectations.

Tesla still fell short of a lowered Wall Street forecast of around 1.34 million deliveries for 2022, according to FactSet.

Tesla, which didn’t respond to a request for comment, said in a news release that changes in how the company produces cars and distributes them to customers left more vehicles in transit to their final destination at year-end.

Tesla endured a challenging year, losing about $US675bn in market valuation as its share price fell 65 per cent.

The company idled its car factory in Shanghai on multiple occasions, early on because of local pandemic restrictions, then again in December as it faced a wave of Covid-19 infections among workers and suppliers.

China’s Covid restrictions impacted production throughout 2022. Picture: Qilai Shen/Bloomberg

Mr Musk suggested last month that the higher interest-rate environment was hurting vehicle demand. In a year-end sales push, Tesla offered discounts to many buyers who agreed to take delivery of vehicles before January.

“Tesla is facing a significant demand problem,” Bernstein Research analyst Toni Sacconaghi, Jr. said in a note to investors overnight.

The carmaker may need to cut vehicle prices by $US1800 to $4500 relative to third-quarter 2022 levels, he said.

Demand problems will continue until Tesla introduces a lower-priced vehicle in high volume, which isn’t on the horizon near-term, he added.

Meanwhile, Mr Musk’s involvement with Twitter, the social-media company he acquired in a deal valued at $US44bn, has frustrated many investors and alienated some potential Tesla buyers.

The Tesla chief executive has liquidated more than $US39bn worth of Tesla stock since the shares peaked in November 2021, linking some of those sales to Twitter.

Amid the turmoil, Mr Musk has emphasised his view of Tesla’s potential. “Long-term fundamentals are extremely strong. Short-term market madness is unpredictable,” he tweeted Friday.

Tesla’s stock-price decline has dented Mr Musk’s personal wealth.

He is now worth about $US137bn, down more than $US130bn from a year earlier, according to the Bloomberg Billionaires Index.

Last month, Mr. Musk ceded the unofficial title of world’s richest person to European mogul Bernard Arnault.

Although Tesla’s annual growth slowed in 2022, the company’s fourth-quarter deliveries marked a new quarterly high.

Tesla said it delivered a combined 1.25 million Model 3 sedans and Model Y crossover vehicles in 2022.

Of those, 388,131 of them were in the fourth quarter. It also delivered 66,705 Model S sedans and Model X sport-utility vehicles combined, 17,147 of them in the final three months of the year, and a first batch of semi-trailer trucks.

The company produced 1.37 million vehicles in 2022, up 47 per cent from a year earlier.

Wall Street expects Tesla’s 2022 sales growth to lift annual revenue more than 50 per cent from a year earlier to top $US82bn, according to analysts surveyed by FactSet.

Analysts forecast profit will have more than doubled from 2021, to nearly $US13bn. Tesla, still the world’s most valuable car company, is expected to report fourth-quarter results on January 25. It also scheduled an investor day for March 1.

The company remains dominant in the US electric-vehicle market, with a market share of about 61 per cent as of the third quarter of 2022, according to S&P Global Mobility.

But its lead shrank in recent quarters as rivals introduced more battery-powered alternatives.

This year is poised to further test Tesla’s ability to maintain its pace of growth in the face of economic uncertainty, higher interest rates and more competition in the electric-vehicle market.

Countering those challenges, as of January 1, some prospective Tesla buyers in the US are likely to qualify for a $US7500 tax credit, thanks to the Inflation Reduction Act President Biden signed into law last year.

The law lifted an earlier production cap that prevented Teslas from qualifying for the credit.

Tesla also is poised to enter the lucrative pick-up-truck segment with its long-awaited Cybertruck, challenging the likes of Ford Motor Co and Rivian Automotive, which are already selling electric pick-ups.

The company is aiming to sell 20 million vehicles annually by 2030, a feat that would make it the largest car manufacturer by volume by a wide margin.

To do so, Tesla is likely to need roughly a dozen factories, Mr Musk has said. He said last month that the company was close to picking a new manufacturing site.

Analysts expect Tesla to deliver shy of 2 million vehicles in 2023, according to FactSet.

– The Wall Street Journal