Tesla investors have a lot to parse after the July 4th holiday: a disappointing quarter of deliveries, a record month of production, and now several weeks of downtime at multiple plants. Bloomberg reported last month that the electric-car maker would halt most production on its Model Y assembly line in Shanghai for the first two weeks of July, then halt the Model 3 line for 20 days. People familiar with the matter said the upgrade work at the factory is expected to be completed by early August to boost production of both the vehicles.
On Monday, TeslaMag said the carmaker’s plant near Berlin would take a two-week break from July 11. German site reported that Tesla It is aiming to almost double its production rate from August, citing an unnamed source. The company made 1,000 Model Ys at the factory for at least one week last month.
Tesla did not mention these plans in its July 2 production and delivery statement. The carmaker offered an upbeat line — it built more vehicles in June than any other month in its history — revealing 254,695 deliveries for the quarter, well below analysts’ estimates.
The quarter’s “relative weakness” was expected, Philip Houchois, a Jefferies analyst with a buy rating on Tesla shares, said in a July 3 note. He wrote that the Chief Executive Officer Elon MuskComments referring to the company’s new plants as “money furnaces” suggest Tesla’s free cash flow could be impacted by significant working capital disruptions.
Tesla shares fell as much as 0.7 percent shortly after premarket trading began on Tuesday.
The biggest blow to Tesla’s performance in the last quarter came from Shanghai’s week-long lockdown in response to the COVID outbreak. The company went to extraordinary lengths to reopen its factory and keep it running, with thousands of workers sleeping on site to maintain partial production.
While Shanghai is Tesla’s most productive plant, its factories near Berlin and Austin, Texas are still operating. Musk staged an inaugural party in the former on March 22 and the latter on April 7.
While they were passionate affairs—Musk danced in Germany and donned a cowboy hat and shades in Texas—the CEO was much more subdued a few weeks later.
“Berlin and Austin are losing billions of dollars right now because there’s a ton of spending and hardly any output,” Musk told Tesla Owners in Silicon Valley on May 31. “Making Berlin and Austin functional and bringing Shanghai back to the fullest is our utmost concern.”
Shanghai’s shutdown and struggling new plants sent Tesla shares down 38 percent in the three months ended June, a record quarterly decline. The S&P 500 fell 16 per cent, the biggest drop for the benchmark US stock index since the first quarter of 2020.
Tesla scheduled its quarterly earnings report for July 20.
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