The continuing Covid outbreak in Shanghai has had an immediate impact on Tesla, the world’s biggest electric vehicle maker, with its March quarter production dipping slightly instead of continuing to rise as previously forecast.
While Tesla reported record electric vehicle deliveries for the first quarter, production fell from the previous quarter thanks to supply chain disruptions and the closure of its Shanghai plant last week.
The closure in Shanghai is expected to continue for part of this week so it’s no wonder CEO, Elon Musk tweeted at the weekend:
“This was an *exceptionally* difficult quarter due to supply chain interruptions & China zero Covid policy…Outstanding work by Tesla team & key suppliers saved the day.”
What he would have also said was that the Tesla performance confirms that demand for key renewables remains solid and will only increase as new plants in Germany and Texas ramp up production over the rest of 2022.
Tesla said on Saturday it delivered 310,048 vehicles in the quarter, a slight increase from the previous quarter, and up 68% from a year earlier. Wall Street had expected deliveries of 308,836 cars, according to analysts’ forecasts.
The company said it produced 305,407 vehicles from January to March, down from 305,840 the previous quarter. Still, that’s an annual rate of more than 1.2 million units over the two quarters and about a third higher than the 930,000 vehicles produced in 2021.
The March, 2022 quarter will likely be a low point for the company as production from its new Berlin factory starts building this quarter, while output from its Austin plant in Texas is already ramping up. In fact, an opening party at the Austin plant is scheduled for this Thursday, April 7.
But a recent spike in COVID-19 cases in China has forced Tesla to temporarily suspend production at the Shanghai factory for several days in March and April as the city locks down to test residents for the disease.
The deliveries were “better than feared given supply chain issues,” said Daniel Ives, an analyst at Wedbush, in a report.
Tesla said it sold a total of 295,324 Model 3 sedans and Model Y sport utility vehicles, while it delivered 14,724 Model S luxury sedans and Model X premium SUVs.
Musk said in October that Shanghai had surpassed its Fremont, California factory – the company’s first plant – in output. The two factories are critical for Tesla’s goal to boost deliveries by 50% this year, as production at its new factories in Germany and Austin are expected to ramp up slowly in their first year.
Tesla shares jumped last week when it confirmed plans to seek investor approval to increase its number of shares to enable a stock split. Tesla shares have risen about 3% so far this year, while GM and Ford shares have declined.
