Should You Buy Tesla Stock Right Now?

EV stocks have lost a lot of steam lately — but Tesla is in a class of its own.

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This article was originally published on All figures quoted in US dollars unless otherwise stated.

The electric vehicle (EV) market has been stumbling as investors shift much of their attention away from growth stocks and look for safer places to put their money.

But avoiding the EV market entirely could be a huge mistake, and ignoring Tesla's (NASDAQ: TSLA) lead in the space could be an especially bad decision. Here's why Tesla's stock is a buy right now.

Vehicle production and deliveries hit the gas

While younger EV companies are still trying to figure out how to increase their production, Tesla's production levels are likely causing envy among its smaller competitors.

For example, Tesla produced 305,407 vehicles in the most recent quarter, an increase of 69% from the year-ago quarter. The EV maker is also quickly getting those vehicles into the hands of customers, with deliveries reaching 310,048 in the quarter, up 68% year over year.

Those figures represent record vehicle deliveries and production for the company, and they came at a time when some production was stifled in China because of COVID-19-related lockdowns.

By comparison, Rivian says it will only be able to produce 25,000 electric vehicles this year (down from its previous estimate of 50,000) because of supply chain issues.  And Lucid Group also cut its 2022 production goal from a previous estimate of 20,000 vehicles down to about 13,000 for the same reason.

Some legacy automakers are also finding the transition to making EVs harder than they anticipated as well. Toyota recently recalled its first mass-produced electric vehicles -- 2,700 total -- less than two months after they launched.

The point here is that while competition is certainly increasing, Tesla has shown that compared to some of its competitors it's doing a better job with EV production.

Automotive revenue and profit are climbing fast

Tesla's automotive revenue increased at a rapid pace, reaching $16.9 billion in the first quarter -- an 87% year-over-year increase. The increase was due to the company's stellar vehicle production and delivery growth.

In addition to its sales jump, the company is earning more profit from its vehicles. Automotive gross profit spiked 132% in the first quarter to $5.5 billion.

The result was a record non-GAAP net income for the EV company, surpassing $1 billion for the first time ever in a quarter.

Vehicle production could be even better this year

It would be one thing if Tesla's stellar quarter was a one-off, but it isn't. The company believes it has a "reasonable shot" at increasing vehicle production another 60% this year, compared to 2021.

Part of that optimism comes from the fact that the company's factory in Shanghai is "coming back with a vengeance," according to Tesla CEO Elon Musk, after COVID-19-related shutdowns curbed production last year.

Additionally, Tesla's newest factories, in Germany and Texas, only just came online in March and April. Tesla is still overcoming some production hurdles from the two plants, with Musk saying recently that the factories are "losing billions of dollars" right now, due to supply chain issues. But both are expected to significantly increase their production output this year and Tesla hasn't changed its previous statement of aiming for 60% higher vehicle production this year -- which would equal about 1.5 million vehicles.

An EV leader that's only getting stronger

Like many other stocks during the pandemic, Tesla's share price surged, only to cool down during a broader market sell-off. The result is an EV leader whose share price is down 38% year to date.

Some of that share price drop comes from Tesla investors worrying that Musk is getting sidetracked by his purchase of Twitter. And while that's certainly something for Tesla investors to keep an eye on, it doesn't change the fact that Tesla's vehicle production is increasing quickly, and revenue and profit are both climbing.

Sure, there could be more share price volatility in the short term. But with Tesla's early moves in the EV industry already paying off and the company far ahead of younger EV start-ups, its stock could continue to be a great long-term play in the EV space, particularly at today's bargain price.

This article was originally published on All figures quoted in US dollars unless otherwise stated.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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