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Tesla (TSLA) says inflation and COVID outbreaks continue to strain supply chain

While Tesla is doing well, the future is not without challenges.

Ozzie Mejia

April 20, 2022 1:22 PM

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Tesla is trending positive following its Q1 2022 report. However, not all is well in Elon Musk Land, as the company continues to navigate the ongoing supply chain crisis. Tesla cited the continuing COVID-19 pandemic, as well as rising inflation, as potential hurdles to the company's future success.

"Challenges around supply chain have remained persistent, and our team has been navigating through them for over a year," reads the Tesla Q1 2022 conference call transcript. "In addition to chip shortages, recent COVID-19 outbreaks have been weighing on our supply chain and factory operations. Furthermore, prices of some raw materials have increased multiple-fold in recent months. The inflationary impact on our cost structure has contributed to adjustments in our product pricing, despite a continued focus on reducing our manufacturing costs where possible."

Tesla has been citing the supply chain crisis as a major obstacle for some time, including after the Q3 2021 earnings report. The company had indicated that semiconductor shortages, port congestion, and rolling blackouts were among the global challenges it was facing. The semiconductor chip famine is an issue that has been dating back to the early days of the pandemic, not just because of how COVID-19 has affected the workplace, but also due to supply being sucked up by crypto farmers.

Tesla (TSLA) rose by more than $1,000 per share in after-hours trading following the release of the Q1 2022 earnings report, which reported a 39.2% automotive gross margin. Regardless of challenges presented by the COVID-19 pandemic and rising inflation costs, investors appear to be generally pleased with Tesla's progress. How much Tesla's future is ultimately impacted by supply chain issues remains to be seen. We'll continue to monitor Tesla at Shacknews, so keep it here for the latest updates.

Ozzie Mejia

Senior Editor

Ozzie has been playing video games since picking up his first NES controller at age 5. He has been into games ever since, only briefly stepping away during his college years. But he was pulled back in after spending years in QA circles for both THQ and Activision, mostly spending time helping to push forward the Guitar Hero series at its peak. Ozzie has become a big fan of platformers, puzzle games, shooters, and RPGs, just to name a few genres, but he’s also a huge sucker for anything with a good, compelling narrative behind it. Because what are video games if you can't enjoy a good story with a fresh Cherry Coke?