Tesla’s (TSLA) deliveries fall for first time in two years, may hit profits

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Tesla’s (TSLA) deliveries fall for first time in two years, may hit profits

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 Tesla’s (TSLA) deliveries fall for first time in two years, may hit profits
Image source: © Valleysnow | Megapixl.com

Highlights:

  • Tesla reported a fall in deliveries for first time in two years.
  • Supply chain problems, Covid shutdowns in Shanghai, and its two new factories causing issues for Tesla.
  • Tesla shares fell in early trading sessions on Tuesday. 

Electric car maker Tesla Inc. (Nasdaq: TSLA) reported a dip in deliveries for the first time in two years. The company is facing headwinds like production issues, profit-hurting inflation, and other macroeconomic factors, Reuters reported on Tuesday.

Hit by Covid-19 locks downs in China, Tesla announced on Saturday that it delivered only 254,695 vehicles in the second quarter, down about 18% from the previous quarter.

The sluggish supply chain is hurting Tesla’s newer plants in Texas and Germany. Production in these units is affected by the supply chain woes, which analysts said would bite into the company's profits.

Tesla, which is also the world's largest electric-car maker, saw its shares fall 3.4% to US$658.50 in early trading on Tuesday.

Dwindling numbers of deliveries will come in the way of Tesla staying ahead in the race of EVs.

Tesla’s fall in deliveries for first time in two years may hit profits© Vzphotos | Megapixl.com

Tesla bracing a series of problems

The EV major is stumbling upon one problem or the other for quite some time now. If this continues, revenue will get impacted as a fallout. Analysts believe that the company’s execution problems and the two new plants in Texas and Berlin could lower the financial results.

A few days ago, Tesla chief executive, Elon Musk said that these factories are “gigantic money furnaces" guzzling billions of dollars. As global inflation has also altered consumer behavior with people trying to deal with the surging costs, it could deflate demand in the coming months. Yet, some analysts are optimistic about some recovery toward the end of this year.   

Bottom line:

Supply chain woes and shortages of components have hit the production of companies globally, ranging from vehicles to smartphones to PCs. The same applies to Tesla. Months of shutdown in Shanghai severely impacted Tesla’s production.

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