Tesla is playing ‘whack-a-mole’ with snags as deliveries fall for the first time in two years

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July 5 (Reuters) – Tesla Inc (TSLA.O) faces a range of hurdles ranging from manufacturing problems to soaring inflation that could weigh on profits, Wall Street analysts said Tuesday, as the electric car maker reported a drop in shipments for the first time in two years.

Buoyed by China’s COVID-19 lockdowns and rising costs, Tesla said on Saturday it delivered 254,695 vehicles in the second quarter, down about 18% from the first quarter. read more

Supply chain wailing at the company’s newer facilities in Texas and Germany is also hurting production, with analysts warning that these issues could weigh on Tesla’s profits.

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Shares of the world’s largest electric car maker fell 3.4% to $658.50 in early trading on Tuesday.

“Tesla’s brilliance has dimmed again with this latest drop in deliveries coming in lower than expected,” said Hargreaves Lansdown analyst Susannah Streeter, adding that this was a setback to the carmaker’s ambitions to be at the front of the EV. package to stay.

“Tesla is facing a whack-a-mole scenario, the faster one problem is solved, the more that arise.”

Analysts at JP Morgan, who have lowered their PT on the company’s stock by $10 to $385, said Tesla’s production and financial results could be hurt by company-specific execution issues at the automaker’s new plants in Texas and Berlin.

Tesla CEO Elon Musk recently described both factories as “giant money-making furnaces” that are losing billions of dollars. read more

Streeter warned that cost of living pressures around the world from blazing inflation could have a knock-on effect on demand down the line.

However, some analysts expect a recovery towards the end of the year.

The Austin and Berlin plants are likely to continue to hold back results until they reach higher utilization rates, but expect volumes to recover strongly in the second half of the year, said Garrett Nelson, senior equity analyst at CFRA Research.

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Reporting by Eva Mathews in Bengaluru; Editing by Ankur Banerjee and Shounak Dasgupta

Our standards: The Thomson Reuters Trust Principles.

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