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What's new at Tesla? Can its meteoric growth continue this year?

Charles Sainsbury
6. 4. 2023
4 min read

Elon Musk's legendary car company boasts all sorts of things. Like its growth this year. But can it continue?

Tesla dominates the EV market. But will it stay that way forever?

Not many people are familiar with Tesla, but let's introduce it anyway. Tesla $TSLA+3.2% is an American company founded in 2003 that specializes primarily in the production of electric vehicles, solar panels and batteries. The company is based in Palo Alto, California and is named after inventor and electrical engineer Nikola Tesla.

Tesla focuses on the development and production of electric vehicles to reduce dependence on fossil fuels and reduce greenhouse gas emissions. The company produces several models of electric cars, including the Model S, Model X, Model 3 and Model Y, which feature high performance, long range and modern design. For many people, however, Tesla is a thorn in the side.

Tesla also makes solar panels and batteries for homes and businesses, allowing users to harness solar power and reduce their energy costs. The company also offers the largest network of fast-charging stations for electric vehicles in the world, allowing EV owners to travel across the country without worrying about a lack of charging stations.

Current numbers

Tesla vehicle deliveries increased 36% to 422,875 vehicles from the previous year. This was up 4% from the previous record of 405,278 vehicles in Q4. Q1 deliveries included 412,180 Model 3 and Y cars along with 10,695 Model S and X cars.

Production again exceeded deliveries, at 440,808 units. Model S and X production was 19,437 units. Tesla needed a strong result given how the stock has traded. Tesla's stock rose more than 68% in the first quarter - its best first-quarter performance ever.

Investors have already largely factored in the impact of Tesla's recent price cuts, which were aimed at restoring demand. Musk has also made it clear that he prefers volume over profitability. Although Tesla's price leverage has long been an advantage it could use at will, thanks to its market-leading manufacturing efficiency.

The next challenge to profit margins is likely to be the ramp-up of production as the company ramps up new manufacturing facilities, as further price cuts may be required to clear inventories - another indicator that repeated price cuts may not be a sustainable solution to the demand risks Tesla faces in the face of intensifying structural competition and short-term cyclical headwinds.

Valuations are still extremely high
YTD, Tesla has gained nearly 100%

The biggest risk at Tesla, is likely the inevitable reduction in profit margins due to recent price cuts and potential valuation reductions. Uncertainties also remain as to whether Tesla's record quarterly deliveries achieved in the first three months of the year have generated sufficient momentum.

It is also still uncertain whether some of the recent positives - such as a recovery in demand - will be sustainable and sufficient to avert the complications that have already arisen from input cost pressures and higher costs due to the start-up of new factories.

Source

Tesla's results aren't bad, but they're unlikely to completely convince investors in the current tight market. Overall, Tesla Inc. is being forced to cut prices on even its most luxurious models, which is a rather worrying sign. TSLA stock is overvalued. We could see a recession in the near future, which would mean even more downside for both Tesla's electric car business and its stock price. Tesla is a favorite of mine, but currently I don't think the brutal growth is set to continue.

Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.

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