Tesla Production Up 70 Percent Despite Troubled Global Chip Supply

Tesla's car production continues to grow despite the world's shortage of chips. (photo; unsplash)

JAKARTA - Tesla Inc on Sunday, December 2 reported record quarterly shipments that far exceeded Wall Street's forecasts. They were also able to overcome the global chip shortage as they increased production in China.

It was the sixth consecutive quarter that the world's most valuable automaker has made record deliveries to customers.

Tesla, led by billionaire CEO Elon Musk, delivered 308,600 vehicles in the fourth quarter, significantly higher than analyst estimates of 263,026 vehicles.

Tesla's October-December shipments were up about 70% from a year earlier and nearly 30% higher than the previous quarter's record shipments. "Great job by the Tesla team around the world!" Musk wrote on Twitter, also quoted by Reuters.

Great work by Tesla team worldwide! https://t.co/lsDTCJtMrp

— Elon Musk (@elonmusk) January 2, 2022

Tesla is increasing production in China despite increased competition and mounting regulatory pressure following consumer complaints over the safety of their products. Tesla is also known to ship models made in China to Europe and several Asian countries.

On an annual basis, Tesla has increased its deliveries by 87% from a year earlier to 936,172 vehicles in 2021. Musk said in October last year that Tesla would be able to maintain an annual growth rate of more than 50% for "quite a long time."

New Factory

“They have beaten all odds,” Gene Munster, managing partner at venture capital firm Loup Ventures, said of Tesla last Sunday. This arises because when many car manufacturers have difficulty producing due to a scarce supply of chips, Tesla actually increases production

"The first is that the demand for their products is very high. And the second is that they are doing a good job of meeting that demand," he said.

Munster said he expects Tesla's shipments to grow to 1.3 million vehicles this year despite bottlenecks in production at new factories and supply chain issues.

Tesla's Chief Financial Officer, Zachary Kirkhorn, said in October that it was difficult to predict how quickly the company would be able to ramp up production at its new plants in Texas and Berlin, which will use new vehicle technology and new teams.

Tesla said in October that it aimed to build its first production car at both facilities by the end of 2021, but it was not known if it met that target. Tesla did not respond to questions from Reuters about the plant. Its Berlin plant was originally slated to start production last summer.

Deutsche Bank said in a report on Friday, December 31 that it expects Tesla to make nearly 1.5 million vehicle deliveries this year, although chip shortages remain a risk to production.

Lack of Chips

According to Elon Musk, in 2020, automakers are cutting chip orders as the pandemic, and lockdown measures suppress the demand. But Tesla has never scaled back its production forecasts with suppliers to support its rapid growth plans, which helped it overcome chip shortages.

Musk also noted Tesla, which designs some of its own chips unlike most other automakers, is also reprogramming its software to use fewer chips.

Musk, who previously said, "2020 will be a year of insane supply chain shortages," but stated in October that he was optimistic that the problem would pass by 2022.

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

Tesla hit more than $1 trillion in market capitalization in October after car rental company Hertz said it had ordered 100,000 of its vehicles. Tesla shares lost ground after Elon Musk wrote on Twitter last November that he was considering selling his 10% stake in Tesla.

But the allegation never happened, in fact overall, Tesla's stock rose 50% in 2021.