Tesla (TSLA) – Get Tesla Inc Report shares extended their longest winning streak in more than a year Thursday, pulling the clean-energy carmaker past the $1,000 mark for the on the second time in two months, as investors bet on the group’s plans to hyper-scale production over the coming years.
Tesla, which delivered a record 936,000 cars last year, launched its Berlin gigafactory earlier this week, with CEO Elon Musk vowing to produce 20 million vehicles in ten years from ten similar production hubs around the world, including a developing site in Austin, Texas.
His caution that supply chain disruptions, particularly in battery production, would be limiting factor in near-term output failed to dampen sentiment, however, with shares rising past the $1,000 mark for the first time since January earlier this week.
“We believe Tesla is better able than its auto peers to weather near-term supply chain disruptions and cost inflation,” said analysts at KGI China Development Financial. “Along with successful price hikes, we think Tesla is on track to deliver margin expansion in 2022, despite macro uncertainties and the negative impact of initial production ramp up at its Berlin and Austin Gigafactories.”
Tesla shares were marked 1.4% higher in pre-market trading to indicate an opening bell price of $1,013.00 each. If the gains hold through the session, the move would mark the eighth consecutive advance for Tesla shares, the longest winning streak since a ten-day run recorded over the late December, early January period between 2020 and 2021.
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Shares were also give a Thursday boost by news that Hertz Global (HTZ) – Get Hertz Global Holdings Inc Report added Tesla-made Model Y sedans to its fleet this week, following on from an announcement last year that it would purchase around 100,000 Tesla-made cars for around $4.4 billion as it ramped-up its business operations following an exit from Chapter 11 bankruptcy protection.
Tesla, however, noted at the time that it hadn’t cut a deal with Hertz, and only agreed to see the Estero, Florida-based group cars under the same terms as ordinary customers. Still, news of the purchase lifted Tesla shares past the $1 trillion mark for the first time ever on October 25.
Still, raw materials prices, as well as labor costs linked to overall production cycles, have risen steadily over the past year, while Nickel prices — a crucial component in EV battery making — are up 53% so far this month after resuming trading on the London Metals Exchange.
In response, Tesla raised prices on its best-selling models in the U.S. and China for the second time in a week this month, amid what CEO Elon Musk called “”significant recent inflation pressure in raw materials & logistics” as a result of the recent ramp in global commodity prices, which he linked to the ongoing war between Russia and Ukraine.
“We attribute the price hike difference to the inflated cost of nickel-based batteries used in Tesla’s long-range and performance EV offerings due to surging nickel and cobalt prices amid the Russia-Ukraine war,” KGI said. “Tesla switched all of its standard-range vehicles to lithium iron phosphate-based (LFP) batteries last October in view of potential nickel and cobalt supply constraints, as well as cost considerations.”
Tesla will post its first quarter delivery figures next week, with earnings for the three months ending in March slated for publication on April 25.
Early indications suggest analyst are looking for revenues in the region of $17.57 billion, up 68.3% from last year and profits of around $2.24 per share.