Elon Musk’s crown jewel, Tesla, is battling production glitches in China and slowing production growth at new factories in Texas and Berlin
Elon Musk’s crown jewel, Tesla, is battling production glitches in China and slowing production growth at new factories in Texas and Berlin
Tesla Inc. is expected to end Its nearly two-year-long record quarter deliveries In the form of long time COVID-related shutdown in Shanghai affected its production and supply chainExposing the risks of its dependence on China.
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While the chief executive of Tesla Elon Musk is acquiring social media platform Twitter Inc.His crown jewel, Tesla, is battling production glitches in China and Slow production growth at new factories in Texas and Berlin,
Analysts expect Tesla to report deliveries of 295,078 vehicles for the second quarter as early as Friday, according to Refinitiv data. Many analysts have lowered their estimates to around 250,000. China’s long lockdown,
it will be from below Its record deliveries of 310,048 in the previous quarterMarking Tesla’s first quarter-over-quarter decline in deliveries since the first quarter of 2020.
The world’s most valuable automaker has made a record number of deliveries every quarter since the third quarter of 2020. Weathering pandemic and supply-chain disruption Better than most automakers.
China has been instrumental in Tesla’s rapid increase in vehicle production, and Musk has praised workers there for “burning oil at 3 a.m.”.
But China’s prolonged zero-COVID lockdown – Wedbush analyst Dan Ives called it Tesla’s “albatross” this quarter – caused a deeper disruption in production than Musk predicted. Tesla’s low-cost, lucrative Shanghai factory produced nearly half of the company’s total number of cars last year, and Ives estimates the shutdown wiped out about 70,000 units in the quarter.
Musk said in April that Tesla’s total vehicle production in the second quarter would be “roughly equal” with the first quarter, driven by a rebound from China. But he recently said Tesla had a “very tough quarter,” citing production and supply-chain challenges in China.
Musk also said Tesla’s New Factories in Texas and Berlin Are “Giant Money Furnaces” That Are Losing Billions of Dollars Because they struggle to increase production rapidly. He said the carmaker’s supply-chain problems are not over and keeping factories running is a matter of concern.
“The key question is the magnitude of the (China production) decline and whether the Fremont (California) factory was able to help support volumes,” said CFRA Research Analyst Garrett Nelson.
He expects volumes to bounce back strongly in the second half of the year, as Tesla ramps up production at its Shanghai factory with the easing of the COVID-19 lockdown.
Gene Munster, managing partner at venture capital firm Loop Ventures, remained cautious about the outlook, saying the third quarter will be difficult for Tesla and other tech firms, citing recession risks.
Musk told executives earlier this month that Tesla was laying off hundreds of employees in the United States. He Had a “Super Bad Feeling” About the Economy And the electric car maker needs to cut about 10% of its workforce.
Still, Musk has said that demand for Tesla vehicles remains strong.
Hurt by Musk’s Twitter deal and China’s lockdown, Tesla shares have fallen 37% since early April. Tesla shares were down 0.3% on Thursday at $683.26.
Musk, a prolific Twitter user who crossed the 100 million followers mark this week, hasn’t been tweeting for over a week.
“Investors are tired of Elon’s rant,” Cowen analyst Jeffrey Osborne said in a report on the Twitter saga, politics and other topics.
“Many of the people we talk to are questioning whether we’ve reached ‘Elon’s pinnacle’.”