On Wednesday, Tesla investors will ensure the electric vehicle organization maintains its ambitious 2022 transportation target as the largest factory, Shanghai, grapples with a COVID-19 shutdown and new factories gradually ramp up the pace. yield. Tesla reports quarterly results and experts are also finding out whether CEO Elon Musk will talk about his $43 billion proposal to buy Twitter and assumes he will use some of his Tesla stock to help fund the deal. The COVID-19-related suspension of Tesla’s Shanghai factory, spending on ramping up new manufacturing plants in Berlin and Texas, and rising supply chain costs are likely to have weighed on its first-quarter earnings, analysts said.

Tesla weathered the global supply chain crisis better than other rivals, posting record shipments and profits for several quarters. But its Shanghai factory was closed for more than three weeks, after the city introduced lockdown measures to tackle a rise in COVID-19 cases.

Musk said in January that Tesla’s volume growth would comfortably exceed 50% over last year, meaning Tesla expects to deliver more than 1.4 million vehicles this year.

Tesla resumed production at its Shanghai factory on Tuesday, according to a report, but a source said that may not mean a return to full production.

He predicted “a reversal from Tesla’s recent run of high margins, driven by cost inflation and production inefficiencies.”

“The Shanghai restart cadence (and) the Berlin/Austin ramp add an element of uncertainty to 2022 deliveries,” Credit Suisse analyst Dan Levy said in a client note, cutting his delivery estimates by 100,000. to 1.42 million this year.

Tesla has raised prices in China and the United States and other countries, after Musk said in March that the American electric car maker was facing significant inflationary pressure in raw materials and logistics in the context of the Ukrainian crisis.

The Austin, Texas-based company is expected to report revenue of $17.80 billion for the January-March quarter, up more than 70% from a year earlier but largely unchanged from compared to the previous quarter, according to data from Refinitiv.

Refinitiv’s average analyst estimate for Tesla is for earnings of $2.26 per share. That’s up from 93 cents per share a year earlier, but on a quarterly basis, it’s the first quarterly decline in two years. Musk delivered Tesla’s first Texas-made Model Y vehicles at a glitzy event earlier this month, but no Texas vehicles are yet listed on Tesla’s ordering website.

“It will likely take some time before the Texas factory can reach full speed,” said Guidehouse Insights analyst Sam Abuelsamid, citing challenges in launching volume production of the 4,680 cells likely to be used in Texas vehicles. Tesla also began deliveries of its new Berlin factory in March.

“You have a lot of fixed costs to run the new factories, but not a lot of production to spread the cost,” Morningstar analyst Seth Goldstein said. Analysts and investors are also asking how Musk’s pursuit of Twitter will affect his handling of Tesla and rocket company SpaceX.

“Executing Twitter would be a possible distraction for a CEO who already has a full plate,” Wells Fargo said in a report. Even if he’s bringing in private equity partners for his Twitter bid, he’ll be a major shareholder in the social media company, meaning he’ll likely have to sell Tesla stock to fund the deal, he said. said Goldstein.

Musk said last week he wasn’t sure he could acquire Twitter and said he had a plan B if Twitter rejected his offer.

Summary of news:

  • Tesla profits could come under pressure from Shanghai factory closure
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