Tesla production ramps up in June as EV makers battle chip shortages

Yahoo Finance’s Rick Newman joins the Live show to discuss second-quarter deliveries for Tesla as the company sees record EV production amid the global chip shortage as well as the outlook for oil.

Video Transcript

- All right. Time to move on because Tesla deliveries, they came in short of expectations, as the EV giant faces ongoing supply chain challenges and factory shutdowns. However, despite these headwinds, Tesla reporting June 2022 is the highest vehicle production month in the company's history. So for more on this, let's bring in Yahoo Finance's Rick Newman. And Rick, so it's an important milestone, perhaps, but also a little bit of disappointment in this latest report.

RICK NEWMAN: Yeah. Tesla sounds like a regular old dinosaur automaker at this point trying to burnish their disappointing quarterly number by just pointing to that June number. But overall for the quarter, they were down 8%. And importantly, of course, they were down compared to estimates. So we're seeing the stock down here. Elon Musk has pre-explained this, if you will. I mean, he has said they're still really working hard to get the new factory in Austin, Texas up and running, and Berlin as well.

And then, of course, they had those COVID shutdowns at their Shanghai factory, which at this point, you could argue is their most important. So Tesla clearly just suffering from two things. One, it's got two new important new facilities that are just getting started, and then shutdowns in China. So that could be reason to expect a rebound from Tesla in the third quarter.

- And Rick, we're also getting some other news from the other automakers. Ford down about 4% or 5% today on the news that it did not meet its sales projections. What kind of trends are you seeing right now as these figures roll in, and especially with respect to these supply chain problems that we've been tracking?

RICK NEWMAN: They can't build enough is basically the story. There are still computer chip, microchip problems within the supply chain. It seems to be easing in other types of consumer products such as electronics and computers. We're seeing sales of those-- sales growth decline because I guess people bought enough of that stuff. And now consumer patterns are shifting away from the stuff you could easily order online over to services and maybe toward big ticket items.

But the automakers have not been able to build enough cars for about the last 12 to 18 months. And that story continues. The hot cars, the electrics mainly, like the Ford F-150 Lightning and the Ford Mustang Mach-E, they're selling every one of those they can get and taking orders way in advance. Same for the new electric Hummer that's just starting to roll out soon. But they just can't build enough of them. So this supply bottleneck in the auto industry, I thought it would be easing by now. But it's not. And it's going to go on well into '23 and possibly 2024.

- Rick, I want to shift gears, sticking with transportation, but forget about the EVs now. We've got to talk about the ice market and crude oil, which is having its worst day in weeks. Any updates on the political front in terms of political pressure towards getting suppliers of crude oil to ramp up their production or maybe tap the Strategic Petroleum Reserve as we approach these midterm elections, where energy prices very, very front and center?

RICK NEWMAN: The Strategic Reserve is tapped out. We have a lot of oil coming out of the Strategic Reserve every day. Biden got that started in November. And that release is going to go all the way through November. So Biden, last couple of days, once again criticized retailers for keeping their gasoline prices too high even though the price of the commodity input crude oil has fallen by about 15%.

And Biden's got a problem here because we are maxed out at gasoline refining capacity here in the United States. So it's not as if anybody's hoarding supplies along the supply chain. The companies that produce gasoline are producing every drop they can. We are seeing capacity-- it's close to record highs. And it's in the mid to high 90s. I mean, you really can't get capacity higher than that. So Biden has to hope that a couple of things could happen. He is going to Saudi Arabia this month. He's probably going to be seeing if he can get the Saudis and some other Middle Eastern countries to put more oil on the market.

There's a possibility Iranian oil could come back on. We just heard that from the prior guest. A couple other things could happen. Biden's problem is there's just not much he can personally do. So I think we'll see what happens with this Saudi Arabia Saudi Arabian trip in a couple of weeks. I think that is maybe the number one geopolitical thing to look at at this point. But look, what this Russia-Ukraine war showing no signs of ending this year, who knows even next year, that is going to just keep a floor under oil prices.

- Yeah. It certainly seems that way. And Saudi Arabia really being that swing producer. And it's worth noting that that meeting that we're talking about that is forthcoming between President Biden and I guess Prince Mohammed bin Salman there, that was announced one month ago after OPEC Plus raised its production for the first time in over a year. Yahoo Finance's Rick Newman, thank you very much for joining us today.