Tesla reveals record quarterly sales despite supply chain struggles

Tesla Shanghai China Factory
Tesla TKed Wall Street’s expectations.

  • Tesla sold 184,800 vehicles in the first three months of 2021.
  • The number is slightly above what analysts on Wall Street had expected.
  • The carmaker battled supply-chain snafus including a worldwide shortage of semiconductor chips.
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Tesla on Friday announced better-than-expected car sales for the first three months of 2021, despite major production and supply-chain headwinds.

The electric-car maker delivered 184,800 vehicles in the first quarter, topping Wall Street’s expectations. The carmaker sold 182,780 of its Model 3 and Model Y, along with 2,020 of its higher-end Model S and Model X. Tesla does not break down its sales by individual model.

Tesla said it saw strong demand for the Model Y in China and that it will continue to speed up production of the refreshed Model X and Model S.

Shares of the automaker sank slightly, about 0.5% in extended trading Friday, though most major stock exchanges were closed for Good Friday. The stock sold off just shy of 1% on Thursday in the lead-up to the announcement.

Analysts largely expected Tesla would continue the rapid pace of production it achieved during the last three months of 2020, as it pulled out all the stops to deliver 499,550 cars before the year’s end. Consensus on Tuesday stood at 173,800 units for the quarter.

Overall production numbers came in at 180,338, Tesla said. Both figures could change slightly, about 0.5%, as paperwork is finalized.

The carmaker faced major headwinds in the first quarter including a global shortage of semiconductors that has kneecapped auto manufacturing worldwide, idling production lines and forcing automakers to build cars without certain components as they await chips.

Read more:The CEO of a top battery startup shares what he learned about business from joining Tesla as employee number 7

In January, Tesla CFO Zach Kirkhorn warned of obstacles Tesla would face in the first quarter, including the semiconductor issue.

“Specifically for Q1, our volumes will have the benefit of early Model Y ramp in Shanghai,” Kirkhorn said on a conference call. “However, S and X production will be low due to the transition to the newly architected products. Additionally, we’re working extremely hard to manage through the global semiconductor shortage as well as port capacity, which may have a temporary impact.”

In February, Tesla temporarily halted production at its Fremont, California, factory, and CEO Elon Musk attributed the break to “parts shortages.” Production stoppages aren’t uncommon for carmakers, and they’ve become more frequent as the chip shortage drags on.

Wall Street expects Tesla to sell more than 800,000 vehicles in 2021, with production capacity aided by new factories that are set to come online in Germany and Texas.

Wedbush Securities analyst Daniel Ives said in a Friday note that he now expects Tesla to deliver more than 850,000 cars in 2021, as demand for EVs grows globally and as President Joe Biden signals a commitment to green infrastructure.

“We believe these delivery numbers are a paradigm and sentiment shifter for the space going forward. Its been a brutal sell off for Tesla and EVs, but we believe that will now be in the rear view mirror,” Ives said.

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Your morning coffee is about to get more expensive

coffee shortage
There’s a coffee shortage.

When it rains, it pours, and when there’s a drought, prices go up.

In this case, the drought is in Brazil and it has the US running low on coffee. That means your morning cup of joe is about to get more expensive.

The drought has decreased crop production just as congested shipping ports have caused US coffee stockpiles to hit the lowest they’ve been in six years, Bloomberg reported. So far, roasters have been relying on their inventories instead of hiking prices, but that will only last so long and wholesale prices have climbed.

Potential losses from the drought could affect half of Brazil’s coffee crops next year, soft commodities expert Judith Ganes told Reuters in December. She said it was hard to determine how badly Brazil’s Arabica beans were hit, but “there will be major failure,” she said. “I saw areas with 100% losses, 50% losses, 30% losses.”

Arabica-coffee futures in New York have increased by nearly a quarter since the end of October, per Bloomberg. And Marex Spectron recently upgraded its global coffee deficit forecast from 8 million bags to 10.7 million bags, citing the drought.

Logistic problems have only compounded the shortage brought on by declining crops. Some facilities in Dinamo, Brazil, told Bloomberg don’t have enough containers to ship out coffee. Some containers and charter vessels aren’t currently available, causing back ups and delays at shipping ports.

David Rennie, head of Nestle’s coffee brands, told Bloomberg it could take two to three years for take-away coffee to return to pre-Covid levels.

But coffee isn’t the only goods shortage hitting the global economy as it reopens this year.

US shipping ports have become unusually congested as imports pick up speed due to surging and unpredictable consumer demand, delaying shipments of all types, from sneakers to meat. Companies struggled to estimate demand correctly, partly explaining the pileup, while factory production was halted off and on during the work-from-home economy of 2020.

The shortage is particularly acute in certain spaces, such as in the semiconductor chips needed to make personal electronics and products with electronic components such as cars. Finally, February’s Texas Freeze suspended much of the US oil sector and the manufacturers who rely on it, making gas harder to come by and things refineries produce, like plastics, more expensive.

That’s not to mention the shortage of things like bikes, fitness equipment, and even lumber, the latter of which has added to already high housing prices. As supply dwindles, all of these things become things Americans could end up paying more for.

But you know what they say, when it rains, it pours.

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Nvidia slips as concerns over global chip shortage weigh on 4th-quarter earnings beat

NVIDIA computer graphic cards
  • Shares of Nvidia fell on Thursday as investor concerns about a global chip shortage weighed on an otherwise positive earnings report.
  • The stock fell 3% in premarket trades on Thursday.
  • The semiconductor industry has been struggling to meet global demand, thanks to an unexpected boom in online activity brought about by the pandemic.
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Shares of chip maker Nvidia fell 3% in premarket trading on on Thursday as investors’ concerns over the global chip shortage weighed on fiscal fourth-quarter earnings that beat expectations.

Nvidia CEO Jensen Huang during the Wednesday earnings call said he expects the shortage to continue this 2021. But Huang assured investors that the shortage would not affect some segments. 

The semiconductor industry in the past year has been struggling to meet global demand, thanks to an unexpected boom in online activity brought about by the pandemic. Nvidia, which outsources from Asia, Taiwan Semiconductor Manufacturing and Samsung Electronics, in particular, is stuck in the middle. Both Asian companies are having difficulty keeping pace with demand, and the bottleneck has trickled down to Nvidia. 

Nvidia sells semiconductor parts for gaming, artificial intelligence, data centers, and automobiles, among other sectors.

The company reported that revenue jumped 61% to $5 billion for the quarter ending January 31 and adjusted earnings of $3.10 per share, both considerably higher than Wall Street’s $4.82 billion and $2.81 per share estimates.

For the current fiscal first quarter, the chip maker set a forecast of $5.3 billion in revenue versus analysts’ expectations of $4.49 billion. 

For the coming year, the Santa Clara, California-based company remains bullish. Nvidia announced that it is working on graphic cards for mining cryptocurrencies like ethereum, even if the CEO said it will not be a huge part of its business.

Last year, Nvidia announced plans to buy Arm, Softbank’s chip division, for $40 billion. Arm is not a chip maker, but licenses chip designs, widely used in mobile phones, to customers such as Apple, Samsung, and Intel.

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