When Tesla (TSLA -1.11%) hosted a conference call to discuss its fourth-quarter earnings, Wall Street and the media seemed largely fixated on a few flashy headlines: the delay of the launch of new vehicles and the shelving of the aspiration to bring to market a lower-cost Tesla vehicle at some point in the future. But there was also one key takeaway during the call that arguably makes a strong bull case for the stock: the electric-car maker expects deliveries to grow at or above 50% in 2022 -- during a year in which the auto industry is facing significant supply chain disruption. Even more, Tesla chief financial officer Zach Kirkhorn said he thinks this could be achieved even if the company's two new factories fail to come online.
Such an optimistic forecast at a time of significant global supply chain uncertainty makes a great case for the company's ability to execute and reinforce its leadership position in the electric-vehicle market -- just as electric car adoption seems to be hitting a tipping point.
Soaring production and deliveries
Earlier this month, Germany government officials gave Tesla a thumbs up to start production at its new factory near Berlin. The approval came after months of delays. While the automaker can't immediately start production at the factory following the approval due to a public objection period and inspections that must take place, it certainly gets the company closer to starting commercial production at a plant that is essentially already finished.
But here's what Tesla bulls should know: the company doesn't even need this factory to hit its full-year guidance for 50%-plus growth in deliveries. Even more, Tesla has another factory ready to come online in Texas soon. The two factories are largely expected to more than double the company's production capacity after their production lines ramp up to full speed (something that will likely take more than a year). Yet these ambitious expansion plans aren't even factored into the company's 2022 guidance.
Model 3. Image source: Tesla.
Of course, it's not a total surprise that Tesla expects strong growth without these new factories. Production and deliveries were soaring headed into 2022. Fourth-quarter vehicle production was up 70% year over year and deliveries were up 71%. With momentum like this in Q4, 20% to 30% growth in 2022 excluding any contribution from new factories would have been a reasonable (and arguably even optimistic) expectation. Chances are that most investors weren't expecting Tesla to say it could grow deliveries a whopping 50% or more in 2022 -- even without its new factories.
About those delays
It's also worth noting that the delayed launch of the Tesla Cybertruck and Tesla Semi could be viewed as a sign of the company's position of strength. The reason behind the delay was straightforward: demand is sufficient enough for the company to be supply constrained even without bringing to market new vehicles. This is an advantageous position, particularly considering the challenging global supply chain environment. If there's any year to avoid a new model with new parts, this is it. And Tesla can do it without hurting its delivery growth potential. Indeed, management indicated that it can actually grow faster if it delays its new vehicles.
"The fundamental focus of Tesla this year is scaling output," said Tesla CEO Elon Musk in the company's fourth-quarter earnings call.
Musk continued:
So both last year and this year, if we were to introduce new vehicles, our total vehicle output would decrease. This is a very important point that I think people do not -- a lot of people do not understand.
If Tesla's output increases faster without new vehicles, then it makes business sense to go this direction -- especially with increased supply chain risks
So here's the simple reason Tesla investors have a good reason to be bullish on the company's trajectory and the demand for electric vehicles in general: Management expects to grow deliveries 50% or more this year without any new vehicles and excluding the impact of two new factories expected to come online this year.
With growth like this, the odds are very high that Tesla is still in its early innings.
