Tesla Gains as Record Deliveries Outweigh Shanghai Shutdown

(Bloomberg) -- Tesla Inc. shares gained after the automaker posted record first-quarter deliveries, bolstering investor confidence that the company can power through disruptions including the continued shutdown of its Shanghai factory.

Tesla rose 1.8% in premarket trading on Monday after the electric-vehicle maker said over the weekend it shipped 310,048 cars worldwide in the three months through March -- about 900 vehicles ahead of the average analyst estimate compiled by Bloomberg. The mark was set despite supply-chain snarls caused in part by growing Covid-19 infections and a maze of rules worldwide designed to keep the virus from spreading.

Those complications intensified Sunday, with word that Tesla’s factory in Shanghai will stay closed Monday, according to an emailed company memo reviewed by Bloomberg. Tesla asked staff to stay home and abide by community orders in the Chinese city, whose 25 million residents are under phased lockdowns. Production at the plant has been suspended intermittently since mid-March.

For now, investors are betting on Chief Executive Officer Elon Musk’s push to build even more cars, with a new factory just opened in Berlin and another set to open in Austin, Texas, on April 7 -- its fourth overall. Musk said on Twitter it had been “an exceptionally difficult quarter” and praised Tesla workers and suppliers.

Tesla’s deliveries were “better than feared” given the supply chain issues, Wedbush analysts led by Dan Ives wrote in a note. “We believe roughly 20k-25k units were pushed out of 1Q into 2Q due to the logistical and factory issues which makes this underlying demand number still look strong with a robust trajectory for the rest of 2022.”

The U.S. and China are Tesla’s largest markets, and the bulk of sales were of the Model 3 sedan and Y crossover. Tesla makes the 3 and Y models, as well as the older Model S sedan and X crossover, in Fremont, California. Shanghai produces 3 and Y models, while Berlin has just started delivering Ys.

The Model 3 now represents about one in every four luxury sedans sold in the U.S. and is the fourth-best selling luxury sedan in China, Piper Sandler analyst Alexander Potter said in a note. 

That’s “an impressive achievement” given luxury sedans from European automakers like BMW AG, Mercedes-Benz AG and Audi were “once untouchable” in China, Potter said, adding that he rates Tesla as still “firmly overweight.”

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