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You Might Not Want To Take Tesla’s ‘Impressive Deliveries’ For Face Value

Trade Tesla Stock Your Capital Is At Risk
Updated: 3 Jan 2022
  • Tesla' ‘Blockbuster Q4 deliveries' doesn't quite tell the whole story
  • Due to safety issues, nearly half a million models were recalled
  • Tesla is up 10% and approaches 2021 high's as investors latch on to Q4 positivity

Overall, Tesla (NASDAQ: TSLA) had another stellar year. Sure, there were a few bumps in the road – Musk’s twitter-sparked stock sell-off led to sizeable retracement; but nothing that the EV market cap giant couldn’t recover from. Tesla has been around for a while now, but more importantly, so has the hype. 

Tesla has earned somewhat of a reputation as the ‘golden child' of the EV family; trustworthy, consistent, and well-known, Tesla has made its way to the top through a perfect blend of top-end engineering, the formidable personality of its CEO, and a general aura of excitement…

In light of recent news, disguised by Tesla’s winning vendetta against the global chip shortage, concerns are arising regarding safety issues in its Model 3 and Model S models. Strangely, investors still appear to be latching on to Tesla’s stand-alone stance when it comes to the chip shortage that has hit EV manufacturers but hasn’t affected the dramatic growth of Tesla sales. 

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The crux of it is, Tesla is currently recalling nearly half a million of its vehicles to address these safety issues that apparently, in the words of the U.S road safety regulator, ‘increase the risk of crashing’. Unfortunately for the high-end company, this wasn’t a one-off misdemeanor – the cars affected ranged across model years 2014 to 2021. So looking at the shiny, lucrative exterior of Tesla – it’s easy enough to be enticed, and to be frank, investors would have relished the 50% rise in Tesla stock price from 2020; but a bit of polish won’t always cover the cracks. 

Out of the 936,000 vehicles delivered in 2021, Tesla has had to recall 475,000 – nearly equating to the total amount of deliveries in 2020. This should really raise a few red flags for investors, but yet Tesla stock is currently showing a daily gain of around 9% – are Tesla investors blinded by unconditional trust in Musk? Or are these callbacks nothing more than a minor pothole in the long road to market share domination? Or perhaps it is the company's chip-shortage navigation that puts the company one step ahead. 

Ramping up China production has been huge for the company; cashing in on government-issued EV subsidies. Should safety issues continue to be reoccurring features of Tesla vehicles, we might find inventors opting for other, reliable companies that still offer a low-price entry. However, Tesla is still very much a force to be reckoned with; and buyers will most likely continue to drown out periods of short-lived volatility. Still, the large-scale vehicle callback should act as a wake-up call for many; even the giants have their downfalls. 

 

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