While chip shortages hobbled production across the auto industry, Tesla (TSLA) has continued to ramp up output and sales, delivering 624,582 vehicles in the first three quarters of 2021, with expectations of roughly 900,000 for the full year. That’s a huge jump from 2020’s 509,737 vehicles delivered. Tesla stock, despite some big ups and downs, has advanced 28% so far this year.Xhttps://imasdk.googleapis.com/js/core/bridge3.493.0_en.html#goog_1721520205Volume 0%
So can 2022 be an even bigger year for the EV maker and TSLA stock?
Tesla plans a massive expansion of its production capacity when it opens its factories outside Berlin and Austin, Texas, in 2022. However, Tesla has no more major markets to enter and essentially no new vehicles. Meanwhile competition continues to surge, with even the U.S. set to have a wide array of EV options, posing short- and long-term threats to Tesla.
Bullish On Tesla
Still, Wall Street is optimistic about the electric-vehicle maker’s outlook as global spending on EVs explodes and chip supply is expected to normalize.
“We believe 2022 will be an inflection point year for the EV industry as the stage is set for massive consumer demand in the year ahead,” said Wedbush analyst Daniel Ives in a note to clients Dec. 13. “While the chip shortage remains a lingering overhang on the EV industry, based on our recent Asia supply chain checks this dynamic is clearly moderating into the next three months and will move from a headwind into a tailwind for the overall EV sector in 2022.”
Ives adds that of the $5 trillion green tidal wave of EV spending expected over the next decade, $2.5 trillion of it is Tesla’s “to own with an iron grip on the market today, with the other $2.5 trillion up for grabs among the 100+ OEMs going after EVs.”
While Tesla will continue to be the leader in its field, Ives says there will be a “slew of winners in this green tidal wave and investors can play many aspects of this massive market opportunity over the coming years.”
Chip Shortage Should Ease
The chip shortage may have slowed Tesla’s production growth, and many other automakers slashed output. That’s provided tremendous pricing power to Tesla, which raised prices in the U.S. several times in 2021. That helped beef up profit margins.
The chip crunch shows signs it’s getting better. The global chip supply is up for the first time in nine months at leading suppliers. But demand is still sky high. Global automakers are just starting to boost production and inventories from low levels. Longer term, chip supplies should begin to normalize.
The omicron variant could offer another setback to chip and other supply chain woes, if widespread shutdowns resume for an extended period.
Berlin, Austin Plants To Open
CEO Elon Musk has said he hopes to begin production at Tesla’s German plant in Brandenburg, near Berlin, by year-end. But Tesla reportedly hasn’t submitted all the paperwork for a new permit. When Berlin opens, the Model Y production ramp is expected to be slow. Tesla reportedly expects Gigafactory Berlin to make more than 30,000 vehicles in the first half of 2022.
As Berlin picks up, Tesla Shanghai will gradually wind down its Model Y exports to Europe, reserving more for local sales. Shanghai will still export Model 3 sedans to Europe. The big question for Tesla Berlin, beyond the actual production start and ramp up, may be how strong Tesla demand will be in China.
Tesla’s Austin factory, which will also make Model Ys, is slated to open soon after. The capacity increase is a welcome development for those who have already ordered the Tesla crossover.
But just as Model Y production picks up worldwide, EV rivals will be stepping up output, especially for crossovers.